Research forecasts a rise in the ratio of private tenants to rental properties by the end of 2024.
- The tenant-to-property ratio is expected to increase to 2.21, up from 2.2 in 2023, signalling a more competitive rental market.
- Over half of landlords are considering reducing their portfolios due to new regulations, impacting property availability.
- Landlords are, despite strong tenant demand, selling or planning to sell parts of their portfolios, reshaping the rental sector.
- Legislative changes, including tax reforms and the Renters’ Rights Bill, are predicted to challenge landlords further.
New research predicts that the ratio of private tenants to rental properties will rise to 2.21 by the end of 2024, compared to 2.2 in 2023. This reflects a more competitive market environment as the number of available rentals diminishes in the face of growing tenant demand. More than half of landlords are contemplating downsizing due to legislative changes, prompting concerns about a tighter housing market.
A significant number of landlords are reacting to these challenges by either selling parts of their portfolios or planning similar actions within the next year. Despite a strong demand from tenants, 30% of landlords have already sold or listed at least one rental property recently, with a further 17.4% considering the same. This shift marks a pivotal transformation within the rental landscape.
Data gathered from over 1,500 landlords, tenants, and letting agents highlights a supply shortage pushing rental prices to unsustainable levels. Almost half of the tenant population now faces ‘rent poverty’. As homes are rented out almost immediately upon listing, the competition intensifies, resulting in escalating rental costs. Mish Liyanage, CEO of The Mistoria Group, pointed out the surge in renters relying on the private rental sector over the past three decades by 132%. He noted that two or more tenants vie for every available property.
Instead of bolstering landlord investments, government measures appear to be reducing available rental stock further. Changes in Capital Gains Tax and Stamp Duty, coupled with the impending Renters’ Rights Bill, are expected to exacerbate these issues, driving rents higher while limiting rental options. Despite these hurdles, buy-to-let investments still offer consistent long-term yields, historically between 8% to 10%.
While facing tough conditions, investors like The Mistoria Group continue to find success in property markets, citing substantial portfolio acquisitions in key regions of North West England. With extensive experience among their team, they expertly manage complex investments, demonstrating resilience in a challenging market landscape.
The forecasted rise in tenant competition underscores a pressing issue within the rental sector, driven by legislative changes and market dynamics.
