Demand for rented homes hits a record high as Covid restrictions ease and tenants are on the move
Demand for rented homes hits a record high as Covid restrictions ease and tenants are on the move... so why do a fifth of landlords want to sell up?
Landlords say demand for rented homes is at its highest in five years as Covid restrictions ease - but fewer want to buy new properties to let, leading to fears of a supply shortage.
The National Residential Landlords Association said a survey of its members showed that nearly 39 per cent believed demand for homes to rent increased in the second quarter of 2021 (April to June) - a five-year high and an eight percentage point increase on the first quarter.
The organisation, which represents landlords in England and Wales, said this was due to the relaxation of Covid restrictions and a more buoyant economic outlook, which had encouraged tenants to move.
However, despite this uptick in demand, fewer landlords want to expand their portfolios, and more are looking to to sell up.
The proportion of landlords intending to buy new properties saw a dramatic drop from 19 per cent in the first quarter of 2021, to 14 per cent in the second quarter, according to the NRLA.
In comparison, the proportion looking to sell up was 20 per cent, up three percentage points from the first quarter of the year.
This was largely due to the aftermath of the pandemic, which landlords believed would still have an impact on their businesses going forward.
A total of 55 per cent of landlords said that their lettings business would 'continue to be negatively affected' by Covid, rising to 81 per cent in Outer London.
Many landlords had to give substantial rent discounts or payment holidays during the pandemic.
A recent survey of 2,000 landlords and tenants by Shawbrook Bank found that almost half (46 per cent) had reduced monthly rent payments due to Covid.
Some 28 per cent said they gave a payment holiday, losing £7,500 on average, while 18 per cent offered a rent reduction, losing £6,500.
Changes to the buy-to-let tax regime in recent years have also encouraged landlords to leave the sector or reduce their portfolios.
The only losers will be tenants as they struggle to find the homes they need
Chris Norris, NRLA
They can no longer deduct their mortgage interest from rental income for tax purposes, and they must also pay a 3 per cent stamp duty surcharge on any properties they buy.
Chris Norris, policy director for the National Residential Landlords Association said:
'The evidence is clear that nationally whilst the demand for homes to rent is increasing, landlords are more reluctant to invest in new properties.
'The only losers will be tenants as they struggle to find the homes to rent they need.'
'The Chancellor needs to recognise the harm being done by tax hikes imposed on the sector.'
'Two tier' rental market
The NRLA also said the pandemic had led to a 'two-tier' rental market in England and Wales.
In Yorkshire and the Humber, Wales, the South West and the South East, more than 60 per cent of landlords said that demand for homes to rent had increased.
But in contrast, just 15 per cent of landlords in Central London said demand for their properties had increased in the second quarter of the year, compared with 53 per cent who said it had fallen.
The NRLA put this down to 'tenants looking to leave London in the wake of the growth in home working' - though it admitted that the tide could turn on this as Covid restrictions were further lifted.
Official data shows that in the year to July 2021 the capital was the only region of the country to see rents fall in real terms, but early signs suggest this trend may be reversing.
'It is clear that there is a significant flight of tenants from the capital in response to the Covid pandemic,' Norris added.
'With lockdown restrictions having ended, and offices beginning to reopen, the jury is out as to whether this trend will continue.'
