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The number of UK homes available to rent has dropped to a 14-year low, piling more pressure on competing tenants to find an affordable place to live, a new analysis has found.
In June, 241,000 homes were available in the private rented sector, compared to 370,000 in June 2019 — a fall of over one-third (35 per cent), according to TwentyCi consultancy.
Collecting UK rental data from sources including estate and letting agents and online property portals, TwentyCi said rental availability was at its lowest level since it began recording the data in 2009.
“Availability is reduced and affordability is down,” said Colin Bradshaw, chief customer officer of TwentyCi. “There are fewer properties and they cost more. That’s not great for renters.”
Mortgaged landlords and their tenants have been under increasing strain as higher interest rates and high demand for lets have led to sharp rises in rents over the past two years.
While the data has yet to show a large-scale exodus of landlords from the market, Bradshaw said the affordability of mortgages had dropped dramatically in the past two months, undermining landlords’ business models and causing some divestment among investors in rental property portfolios.
“The yield position on any asset that you own where it’s mortgaged is likely to be severely eroded,” he said.
Average buy-to-let mortgage rates jumped sharply this week, accounting for 6.97 per cent for a two-year fixed rate deal, up from 6.69 per cent last week, according to data provider Moneyfacts. The majority of buy-to-let mortgages are interest-only, amplifying the effects of higher rates on monthly payments.
As stock levels have dwindled, rents have risen sharply. TwentyCi said rental prices have gone up by 23 per cent since 2019, with a rise of 8 per cent in average rents over the six months to June compared with the same period last year.
The Bank of England this week said in its financial stability report that “many landlords” were likely to seek to raise rents to offset their higher costs.
This would be compound renters’ relative drawbacks, it is suggested, since they often have lower incomes than homeowners and low levels of savings. “Higher costs relative to income may lead to an increased reliance on consumer credit, or difficulty paying off existing consumer credit or other types of debt. It may also increase their vulnerability to future adverse shocks,” the report said.
Simon Cooper, a partner at West Country estate agent Stags, said the supply crunch had led to greater competition among prospective tenants. In comments accompanying a monthly survey from the Royal Institution of Chartered Surveyors, he said: “The massive shortage of houses to rent ensures that most properties are let to quality tenants almost immediately. Not surprisingly, this is having an upward effect on rents.”
A related factor driving these shortages is greater inertia among existing tenants, who fear giving up a letting only face higher costs elsewhere. Ben Twomey, chief executive of campaign group Generation Rent, said: “Many tenants might want to move but simply cannot because the rent on a new tenancy is now far higher than what they are currently paying.
“Fewer properties are becoming available and those that are being snapped up more quickly by tenants who do need to move on. That is keeping rents high and unaffordable for many.”
This is borne out by TwentyCi’s latest data, which found the average rental tenancy length was 4.8 years, up 32 per cent from 3.6 years in 2019. It added there was wide variance between regions, with an average of 7.1 years in Wales compared to 4.4 years in the Southeast.
The data also points towards a sharp difference in the availability of homes to rent at either end of the price spectrum. For premium properties renting at £3,000 a month or more — a market dominated by central London — availability has increased by 41 per cent since 2019. But for those seeking to rent for less than £800 a month, there are 32 fewer properties per cent than just a year ago and 65 per cent liter than pre-pandemic.