The number of tenants experiencing rent hikes in August increased to an all-time high of 40%, up from 31% a month earlier, according to latest PRS report from ARLA Propertymark.
Tenants face higher rents because additional taxes and restrictions on landlords are pushing property owners to sell up, reducing the supply of properties on the rental market.
The phasing out of mortgage interest relief, scrapping of the 10% ‘wear and tear’ allowance and introduction of the 3% stamp duty surcharge for those buying additional properties, means that fewer investors are entering the buy-to-let market or acquiring additional homes.
Many existing landlords have also decided to exit the market as a result of the tax changes, again taking properties out of the rental market.
David Cox, ARLA Propertymark chief executive, said: “As we’ve highlighted before, the impact of recent and ongoing tax changes continues to have a material impact on the buy-to-let market.
“Four in ten tenants saw their rents rise in August – the highest level we’ve seen since records began.”
ARLA Propertymark’s data shows that supply of available properties did actually increase to 197 in August, from 184 in July, but significantly more rental properties are still needed to meet demand.
Cox added: “Although it’s encouraging to see the number of properties available to rent rising, supply still isn’t anywhere near high enough to slow down the pace of rent rises.
“We need more homes to rent, and for government to change its narrative and recognise the very valid role buy-to-let plays in the housing mix.
“Driving small landlords out of the market ultimately impacts tenants most.”