Last October, Sales Manager at Advantage Home Construction Insurance, James Topping, wrote a feature for our friends at PBC Today, explaining that we’re starting to feel the tangible effects of “Generation Rent” – an entire age group of young people who simply cannot escape serial renting.
He suggested that the biggest change has been the emergence of the private rental sector and the build-to-let market, as developers are figuring out new ways in which they can cater to Generation Rent.
One year one, we’re continuing to feel the effects of the rising demand for rental properties from those who either can’t or don’t want to get on the property ladder.
This month, Property Wire reported that: A shortage of homes available to rent coupled with strong demand from tenants has led to record asking rents in all areas across Britain except Scotland and the North East of England, the latest lettings index shows.
Asking rents outside London have reached a peak of £828 per calendar month, the biggest quarterly jump in rents at this time of year since 2015, according to the data from property portal Rightmove.
Meanwhile, in London rents are at a record of £2,104 per calendar month, the biggest quarterly jump at this time of year since Rightmove started recording this data.
Overall asking rents, excluding London, increased by 3.2% year on year and by 1.3% quarter on quarter while in London they were up 5.6% on an annual basis and up 2.2% on a quarterly basis, the highest since 2016.
Scotland and the North East are the only regional markets not to have seen record asking rents this quarter. In Scotland rents increased 2.1% year on year to £707 but fell by 1% quarter on quarter. In the North East they were up 2.1% year on year and up just 0.6% quarter on quarter to £570.
Nationally, the number of available rental properties is 13% below the previous low recorded in the third quarter of 2015, and 24% down in London, as tax changes deter new and existing landlords.
Indeed, new research from Rightmove shows almost a quarter of landlords, some 24%, are planning to sell at least one property from their current portfolio despite record asking rents. Of these, 13% say they will be decreasing their portfolio and 11% say they will be selling all of their rental properties.
The most common reasons given for selling up are the changes to legislation including the recent tax relief changes and the ban on tenant fees leading to an increase in their costs for some.
Money Expert reported that: The Royal Institute of Chartered Surveyors has reported that in order to meet growing demand, around 1.8 million new rental homes must enter the UK market within the next 10 years.
With home ownership becoming increasingly difficult due to affordability pressures, the need for rental homes is only set to go up and, RICS report, at current construction rates, we are set to be left with a shortfall of around 1.8 million homes.
“The Government must urgently deliver 1.8 million new rental homes for UK families, as new figures show a sharp drop in the number of available properties. New figures show an ailing rental sector that cannot keep up with predicted demand,” RICS reported.
“RICS figures show that 86% of landlords have no plans to increase their rental portfolio this year – with that trend set to remain for the next five years. Additionally, a net balance of 58% of RICS estate agents have reported a drop in buy-to-let sales since May.”
They urged the government to shift policy in favour of the rental market, rather than focusing on home ownership, as they are currently indicating they intend to do.
They argued that the recent stamp duty hike has done damage to the market, and to potential renters, as landlords are being deterred from investing in more properties. This downward trend, they argue, is only set to accelerate when reforms to the tax relief system for landlords further decrease their potential earnings.
RICS said “We urge the Prime Minister to abandon David Cameron’s previous home ownership focus and reverse April’s Stamp Duty measures in order to address short term rental supply issues.”