A recent study conducted by Cornerstone Tax, the UK’s leading property tax advisors, sheds light on the current challenges facing both landlords and tenants in the rental market.
The data has revealed a growing sense of instability and uncertainty among Brits as a staggering 42% of renters fear that they will be stuck renting for the rest of their life. The rental market crisis has intensified as mortgage rates and deposit requirements have consistently surged in recent years, making homeownership an increasingly distant dream for many.
The rise in the number of renters has triggered fierce competition in the housing market. Notably, 17% of Brits report losing out on their desired rental properties due to bidding wars within the last two years.
The situation is also dire for those who are lucky enough to secure a property, with a staggering 19% of Brits saying they have had to change rental properties more than five times in five years because of landlords and not through any fault of their own.
The escalating cost of renting has been a significant driver of change in the rental market. The average rent for newly let properties now stands at £1,304, a figure exacerbated by soaring interest rates and landlords passing on their escalating expenses to tenants.
As a result, 15% of buy-to-let landlords have decided to exit the sector, as revealed by Cornerstone’s research. They cite the mounting costs as a primary reason for selling their rental properties.
Furthermore, the survey uncovers that 18% of potential buy-to-let landlords have been discouraged from entering the market due to increased regulations and rules. This growing reluctance of buy-to-let landlords to enter the market will only serve to exacerbate the supply and demand issues which are currently causing upward pressure on prices and bidding wars due to the lack of stock.
Group Chairman of Cornerstone Tax, David Hannah said, “The rental market is currently experiencing an unprecedented surge in prices, with an average nationwide increase of 12 percent in August, the largest annual jump on record. In London it is particularly concerning as August marked the sixteenth time in the last eighteen months that Londoners have faced double-digit rent increases.
“This sharp increase in London’s rental costs has thrust the capital to the forefront of a nationwide battle to combat this issue which is causing more and more people to struggle to survive financially.
“The impact of rising rents outpacing income growth has created a severe affordability challenge leaving millions in a dire situation.
“London’s mayor, Sadiq Khan, has called on the government for swift intervention, including granting him the authority to freeze rents in the city. The rental crisis is a national issue that demands further government action, including increased housing benefits and substantial investments to meet London’s affordable housing needs.
“Landlords must be considered also when introducing any new initiatives in the rental market. We have seen a continued exodus of buy-to-let landlords as it becomes a less appealing investment due to increased costs.
“Landlord rights must be considered, and regulations must be introduced to aid the number of buy-to-let landlords and in turn, increase rental supply in the UK which will alleviate the continued rise of rental prices.”
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