Experts offer solutions to control soaring rents
With recent data showing rent prices hitting new highs, experts are providing their insights on what triggers these increases and how to bring the prices down.
As property and finance experts pointed out, the main catalyst for rising rent prices is the shortage of available rental stock, with low volumes struggling to meet high tenant demand over the past two years.
“The story of the rental market continues to be one of high tenant demand but not enough available homes to meet that demand,” Tim Bannister, director of property science at Rightmove, said.
“Last year, we saw exceptional numbers of tenants looking to move, and, this year, we have seen no let-up in this trend. While stock levels are beginning to improve, with June seeing the highest number of new rental listings coming to market so far this year, the wide gap that has been created between supply and demand over the last two years will take time to narrow.”
Bannister added that this imbalance will continue to support asking rent growth, leading Rightmove to forecast an increase of 8% in asking rents by the end of the year.
Read more: Landlords hit with double blow.
According to David Hannah, group chairman at Cornerstone Tax, there is hope that more available properties will enter the UK housing market – thus creating a more manageable supply and demand levels and subsequently halting the rapid rise of rental prices.
“I think homeowners will look to take advantage of the record house prices and look to maximise the prices they can get if they sell their property, causing an increase in supply for the UK property market,” Hannah added.
He also expects a solution to global supply issues will cause an increased supply of new builds, providing the UK housing market with some much-needed extra stock, which should subsequently stop the rental price increases.
The National Residential Landlords Association (NRLA) said the government can also do its part in correcting the currently imbalanced high tenant demand and low level of rental stock.
The NRLA argued that by removing the stamp duty levy on additional properties, the government will encourage homeowners to open almost 900,000 new private rented homes across the UK over the next 10 years.
The residential landlords’ association said that, unfortunately, government policy and punitive tax increases have hurt the private rented sector. It claimed that since the government began restricting mortgage interest relief for landlords, the number of private rented homes in England had fallen by over 250,000.
Ben Beadle, chief executive of the National Residential Landlords Association, questioned the decision of the government that led to landlords cutting the supply of rental housing while demand was extremely strong. He appealed to the new administration to take steps to encourage investment in the private rented sector to meet the rising demand.
Read more: Next PM must end government ‘hostility’ to landlords – NRLA.
Rightmove’s latest Rental Trends Tracker revealed that national average asking rents across the UK – excluding London – hit another new record of £1,126 per calendar month, rising 3.5% from last quarter and 11.8% higher than last year.
Average asking rents outside London have jumped by 19%, or an equivalent of £177, in the two years since the pandemic started, the same growth in rents that took eight years to reach pre-pandemic.
London also posted new record average asking rents of £2,257 per calendar month, with annual growth now exceeding 15%, the highest ever annual rate of any region.
Rightmove reported that average monthly rental payments are now 40% higher than they were 10 years ago, while average mortgage payments for the same properties are up 13%.
