Rental prices in the UK have soared over the last few months alongside a drop in advertised rental properties.
Although we are in the midst of a cost of living crisis, property rents have increased throughout the UK. In September 2022, available rentals were a third down and this has helped fuel significant increases in rental costs.
According to ONS figures, rent costs have increased 3.4% in the 12 months to August 2022. Some areas seeing a higher increase, with the East Midlands seeing the highest growth at 4.5%.
Demand for rental properties continues to increase along with the increases in rent. Likewise, tenants renewing their tenancies is also increasing, with many preferring to remain where they are, possibly to keep a lower rent with a known landlord or being priced out of purchasing their own property. The number of tenants remaining in their current properties obviously has a bearing on the number of new rentals coming to market.
RoomsForLet data shows enquiries up over three fold for September 2022 compared to the same period in 2021 whilst the number of new adverts placed is 9.5% down for the same periods.
In part this change in the market is caused by the introduction of Section 24 meaning Landlords are selling properties as profit is reduced, due to an increased tax burden, making it less viable. Additionally, the changes to Stamp Duty means less Landlords were entering the market or purchasing new property. Whilst Section 24 was introduced to try to calm the rental market, it seems to have had the opposite effect. Recent (October 2022) Stamp Duty changes may bring more landlords back to the market. However, interest rate rises and the reduction of available mortgage products will more than offset any benefits.
With demand greatly outstripping supply, more rental stock is urgently required. Many families are currently struggling with the cost of living yet also have spare room in their own homes. Children may have grown up and left, some may be looking for company in a larger house than required. Whatever the reason, these rooms can be let allowing home owners to earn up to £7500.00 per year tax free using the governments Rent a Room Scheme.
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