New Prime Minister must tackle the supply crisis in the private rented sector

The next Prime Minister must tackle the supply crisis in the private rented sector in London if homeownership ambitions are to become reality.

That is the blunt warning from the National Residential Landlords Association (NRLA) as survey data shows the supply of homes to rent in the capital is likely to keep falling.

According to research by the consultancy BVA-BDRC, in the second quarter of the year, 17 per cent of landlords in central London said they plan to cut the number of properties they let in the next 12 months.

This is up from the six per cent who said the same in the first quarter of this year.

In contrast 14 per cent of landlords in central and outer London say they plan to purchase new properties to rent out over the next year.

Against a picture of falling supply, 75 per cent of landlords in central London reported increased demand for rental housing in the second quarter of 2022.

With the demand for rental housing outstripping supply, official data has found that private rents across London rose by 2.1 per cent in the 12 months to July this year.

The NRLA warns that this trend is a direct result of Government policy and the subsequent impact of punitive tax increases on the sector.

Since the Government began to restrict mortgage interest relief for landlords, the number of private rented homes in the capital has fallen by 82,000.

In contrast, those providing holiday lets continue to enjoy mortgage interest relief.

This has created a market distortion which favours short-term housing over longer term rentals.

The NRLA calls on the next Prime Minister to take steps to encourage investment to meet the rising demand.

Richard Blanco from NRLA said: “The figures show it was a nonsense to think that cutting the supply of rental housing, when demand is strong, would make it easier for those who want to buy their own home.
All it is doing is driving rents up, leaving tenants with less cash to save for a deposit.

“We need a strong and vibrant private rental market in London.

This is vital for those who rely on the flexibility it provides, as well as the help it offers to those who need somewhere to live prior to becoming homeowners.

For many in this position, the promise of social housing tomorrow provides cold comfort today.

“The next Government needs to reset its plans for the sector and demonstrate support for tenants across the capital.”

Richard Blanc
NRLA

 

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