In total, seven out of 11 UK regions saw a decline in excess of the UK-wide average, including a 24.6% fall in the East Midlands, a drop of 20.8% in the South East and a decline of 16.7% in the West Midlands. The supply of available stock in East Anglia has depreciated by 11.9% since 2011.
Three areas saw dips in supply below the UK-wide average since 2011: Yorkshire and Humberside by 5.5%, the North West by 8.5% and Greater London by 3.9%.
Just one area, the North East, saw an increase in supply, bucking the national trend with a significant rise of 33.4% in available property to rent, owed in part to a rise in the number of ‘accidental landlords’ after values plunged following the credit crunch, with many would-be sellers resorting to letting out their properties rather than sell at a loss.
But while housing supply in the PRS has fallen, demand from tenants has continued to grow, as many would-be buyers are priced out of buying property.
Tax changes affecting landlords, including the phasing out of mortgage interest relief, have contributed to the fall in housing stock, as some landlords seek to sell up or downsize their portfolios simply to avoid making a loss, according to Home.co.uk.
The widening supply-demand imbalance in the PRS has pushed up rental prices across many parts of the country, the figures show.
Among areas with the largest fall in supply, Wales has seen rents increase by a demand-driven 11.3% over the last year, while Yorkshire has seen rents rise by 8.4% during the corresponding period.
In Scotland the last six months have seen an increase of 5.4% in the average rent.
In the South West rents are up 5.7% over the last 12 months while in the South East the average rent increase is 0.9% and in the East Midlands the rise over the same period has been 4.5%.
It is a different story for those areas where supply is holding firm or rising.
London’s more modest dip in supply has seen rents fall by 5.3% over the last 12 months, due to over-investment in the PRS last year driven primarily by the stamp duty changes, in which a 3% levy was introduced for those buying additional homes, including buy-to-let properties.
In the North East there has been a fall of 8.9% over the last six months, indicating that the long-term increase in supply of rental properties is having an adverse impact on rents.
Home.co.uk director Doug Shephard commented: “It is ironic that the government’s justification for tax changes in the PRS was to ‘level the playing field’ for wannabe homeowners. The result of this barrage of red tape and taxation, at both local and national government levels, has meant that the supply of rental properties has fallen behind demand in most regions thereby driving up rents. Of course, it’s not the first time that government tinkering and tax grabs have backfired but the upshot for Generation Rent is appalling.
“The ‘elephant in the room’ for the government is that record low mortgage interest rates have driven unprecedented investment in the PRS over recent years. Simply put, those already with significant home equity have been able to come up with deposits for properties intended to let whilst aspiring homeowners are as cash-strapped as ever as they pay out huge sums in rent. However, ultra-low interest rates and the associated pain for renters look set to persist for the foreseeable future.”
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