The rental market is in the midst of a huge transformation. According to a recent report published by the Royal Institution of Chartered Surveyors (Rics), the number of new properties coming on to the market to rent has fallen sharply. The introduction of the renters’ rights bill has most landlords scrambling to change their approach. As a direct result, they are looking to divest from their properties. Renters are hurting now more than ever. Over the next few months, rental prices are likely to keep climbing.
Last October, Knight Frank announced that the anticipated renters’ rights bill will come into effect as early as next year. This bill is pushing landlords to sell off their rental real estate. This trend corroborates Rics’ recent findings. They found a “consistently negative trend” in landlords providing their units on the market for rent. The report provides an eye-opening look at how quickly rental properties are exiting the market. This decrease is the steepest we’ve experienced since the first Covid shutdown nearly five years ago.
Financial constraints are affecting renters as well. For the average renting household, £62 is all that’s left over at the end of each month – making the issue of affordability a pressing one. Considering that rental prices are already expected to increase over the next 90 days, this crisis could stretch household budgets even thinner.
Simon Rubinsohn, chief economist at Rics, said it was no surprise that the Bank of England made interest rates cheaper earlier this month. The narrow split vote has left unclear the timing and extent of any further cuts. He continued to say that the speculation around the chancellor’s upcoming autumn budget is adding to a jittery market.
Last week’s Private Rental Market Summary reported that average private rents in Great Britain fell in real terms. It’s the first decline in half a decade. This drop could be a temporary trend, as rent prices are set to increase once more. Sarah Coles, head of personal finance at Hargreaves Lansdown, cautioned that the age of blistering rents is not finished. First and foremost, she called attention to the ongoing instability in the rental market.
The Rics survey showed signs of a cooling housing market, reporting the first drop in homebuyer inquiries for July. Estate agent Hamptons noted that lower mortgage rates have eased some pressure off the housing market, allowing potential buyers more flexibility.
In July, the average rent on newly let properties fell by 0.2% year on year. Yet, this trend could be in jeopardy. Tom Bill, head of residential research, said the latest numbers provide relief for renters. He warned against getting too carried away with future projections.