Tenants will compete over fewer homes and pay ever-higher prices thanks to Labour’s attack on landlords, according to a closely-watched survey of property experts.
The latest survey from the Royal Institution of Chartered Surveyors reported that the number of available rental properties for let was dwindling while demand from renters rose.
One said that rents ‘must rise’ as a result of the increased stamp duty for landlords announced in October’s Budget, while another said ‘The cult of buy-to-let is dead’.
Some of the agents surveyed gave their opinion ahead of the 30 October Budget, meaning the readings could get more dismal in future.
In the Budget, landlords saw further unwelcome changes including an increase on stamp duty on buy-to-lets and second homes .
These buyers already faced a 3 per cent surcharge above and beyond what those purchasing a property to live in currently pay.
However, from 30 October that went up to 5 per cent, adding thousands of pounds to the cost of buy-to-let and second home purchases.
Gap: The chasm between the supply of properties available for let and rising public demand from renters continues to expand, according to Rics members
Rachel Reeves claims this will free up some 130,000 homes – as more homes will now be bought by owner-occupiers, rather than landlords.
However, while that may be a good news for aspiring homeowners, it also means fewer homes in the private rental sector.
Many Rics members were critical of Labour’s Budget for making the situation worse for renters, not better.
Andrew Oulsnam of Oulsnam lettings agents in Birmingham said: ‘The problems in the rental market remain, with too many tenants chasing not enough property.
‘The Budget will make it worse, rents must rise as a result.’
Neil Foster of Hadrian Property Partners in Hexham added: ‘Rental stock continues to dwindle, applying further upward pressure to rent levels.
‘Quite where the Ivory tower dwellers in Westminster expect most private tenants to live is a mystery.’
Daniel Wiltshire, an actuary and independent financial advisor at Wiltshire Wealth says a number of his buy-to-let clients have now decided that property investment is no longer for them.
‘The cult of buy-to-let is dead,’ said Wiltshire. ‘I’ve had several meetings with would-be property investors who have decided to pull out and look at stocks and shares instead.
‘The national psyche is hard-wired to pour money into bricks and mortar, but the recent increase in stamp duty, along with other incremental tax rises over the past 10 years, has made even the most die-hard property enthusiast question the wisdom of putting all their eggs in a single, highly taxed basket.’
Rents predicted to rise: Graph shows how forecasts by Rics members have changed
Drop in landlords buying new properties
Woes for renters persist as rental properties continue to disappear from the market while many would-be investors no longer want to buy new ones.
All over the UK, Rics members were reporting fewer landlords searching for new properties, but in the North West and Midlands this was particuarly prevalent.
Will Ravenhill, of Readings Property Group in Leicester added: ‘Many more landlords are looking to sell as they are sick of successive Governments’ attacks on the private rented sector.’
The Labour Government is bringing forward a renters’ rights bill to end Section 21 ‘no-fault’ evictions, which is set to become law by summer 2025.
John Chappell, a Rics member based in Skegness in Lincolnshire said: ‘The market is still very much unstable due to growing concerns over extension of tenants’ rights.
‘Increasing costs and admin will lead to less rented accommodation being made available.’
Fewer landlords coming to market: The graphs show the net balance as a negative, meaning more Rics members are seeing fewer new landlord instructions in their local areas
What will happen to rents?
More Rics members, comprising of letting agents and surveyors, said they had seen tenant demand rise between August and October than those who said demand had decreased.
During that same time, they also said the number of new rental homes coming to market reduced.
The majority of agents and surveyors expect rental prices to be driven higher in the months and years ahead, due to this mismatch between supply and demand.
In every UK region, more Rics members said rents would rise over the coming three months than those who said rents would fall. This was most overwhelmingly the case in Wales, the Midlands and Yorkshire and the Humber.
Colin Townsend of John Goodwin letting agents in Malvern, Worcestershire said: ‘Rents continue their upward rise. This trend looks likely to carry on as there was very little encouragement in the Budget to persuade landlords to invest in the rental market.’
Daryl Woodward of Peninsula Estates in the Wirral near Liverpool said there were ‘fewer instructions, as landlords exit the market, rising rents and tenant demand, with less property to let.’
During the last four years the average rent on a property in the UK has gone up by 34 per cent, according to Zoopla. Some cities have seen steeper rent rises of more than 40 per cent.
Over the next five years, Rics members are expecting rents to rise by around 5 per cent each year on average.
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