The private rented sector has increase massively over the last 5 years. In 2017 alone, the number of households in the sector increased from 2.8 million to 2017. Fast forward five years, rental prices are now increasing at its fastest rate. There are signs that this will rise further unless estate agents can increase their supply of rental homes.
The Office for National Statistics lates research shows that the average newly advertised rental price in the UK has reached £969 per calendar month.
Sarah Coles, Senior Personal Finance analyst at Hargreaves Lansdown, commented: “Rents are rising faster than any time in the past five years, forcing tenants to choose between squeezing their spending even harder, or uprooting their life. Either way, they’ll end up worse off.”
The government have been called to include the provision of new rental homes in all parts of the country by the Association of Independent Inventory Clerks (AIIC) because they are conscious of the widening supply-demand imbalance and the impact of it on the private rented sector.
Daniel Evans, Chair of the AIIC, said similar: “We’ve had reduced social housing for the last 20 years, and at the same time the many restrictions on landlords have reduced the growth of the PRS (private rented sector) as a compensatory mechanism to fill this shortfall,”
“We also need to look at how unaffordable housing across the country has locked many first-time buyers out of getting on the property ladder, leading to the average first-time buyer age going up to the mid-30s.”
Daniel further communicates that the demand for rental homes is coming from the younger generation, who may have to, or want to, rent for the long-term.
“All of these things taken together means demand is very, very high – probably as high as it’s ever been for many decades – while supply just simply isn’t keeping pace. Such a gap between supply and demand cannot be sustainable for the long-term,” Evans added.
Additional research from the consultancy Economics claims that the private rented sector will have to increase its supply by 227,000 homes per year in order to meet demand for 1.8 million new households over the next decade.
The long-term issue with such a divide between supply and demand is that prices continue to soar. “Rocket-like rent rises will simply end up making rental properties similarly unaffordable to generation rent, and they may decide to stay living with their parents for longer.”
The government had seen “A series of policy changes” which has resulted in the reduce level of stock in the rental market within the UK, accord to the Residential Landlords Association (NRLA).
NRLA chief executive Ben Beadle says: “The rental housing supply crisis is only set to worsen, as renters continue to feel the effects of a market starved of a healthy supply of homes for private rent.
“The government needs to accept that for all the rhetoric about homeownership, many people need to rent beforehand. Policies that dampen investment in the private rented sector serve only to reduce choice, drive up rents and, as a result, make homeownership more difficult to achieve.”
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