A recent study commissioned by the National Residential Landlords Association (NRLA) reveals that two-thirds of landlords are witnessing an ongoing increase in demand for private rented housing. The research, conducted by BVA-BDRC, highlights that 63% of landlords experienced a surge in demand from tenants during the final quarter of the previous year. This marks a significant rise compared to the pre-pandemic period, with only 25% of landlords reporting increased demand in Q4 2019.
The NRLA’s findings align with their earlier warning about a substantial rise in the demand for private rented housing. In their Budget submission to the Treasury, the NRLA pointed to various factors contributing to this trend, including projections from UCAS indicating a potential one million applicants for higher education in 2030—nearly a third higher than in 2022.
Additionally, the Office for National Statistics forecasts a more than 6% increase in the population aged 15-29 over the next decade. The Office for Budget Responsibility predicts net migration flows to settle at 245,000 annually by 2026/27, with migrants being three times more likely to occupy private rented accommodation than the UK-born population.
Hamptons predicts a scenario reminiscent of the aftermath of the 2008-09 financial crisis, where one million potential homeowners turned to the rental market due to difficulties affording higher mortgage payments.
Despite the growing demand, NRLA’s survey data reveals a concerning trend among landlords. While 11% plan to increase the number of properties they let, a significant 30% plan to reduce the number they rent. This poses a challenge in the face of an already chronic shortage of available rental homes.
Addressing this issue, NRLA is urging the Chancellor to reconsider damaging tax hikes impacting both landlords and tenants. The association calls for an end to the 3% stamp duty levy on homes purchased for letting purposes. According to Capital Economics, this move could potentially unlock almost 900,000 new private rented homes across the UK over the next decade, offering relief to the housing crisis. Moreover, it is estimated that such a change would lead to a £10 billion boost in Treasury revenue through increased income and corporation tax receipts.
Ben Beadle, Chief Executive of the National Residential Landlords Association, emphasized the need for the government to recognize the growing demand for private rented housing and take swift action to address the housing shortage. Beadle stated, “The demand for private rented housing is only set to grow. As it does, would-be tenants will face the reality that there are not enough homes to meet their needs. This is a result of deliberate efforts using the tax system to dampen supply.” He urged the government to consider all housing types, emphasizing the importance of new homes for private rent in meeting the increasing demand.