Landlords and renters’ activists are at either end of the spectrum reacting to a controversial report on the private rental sector.

Yesterday the Resolution Foundation think tank published a report claiming that no more than one per cent of landlords had quit the sector as a result of interest rates soaring and the sharp increase in costs of operating a buy to let property. The foundation dismisses concerns over the costs to landlords as “scare stories”.

But the National Residential Landlords Association chief executive Ben Beadle says: “Rising rents are a result of a range of factors. Whilst wage growth plays a role, a key driver is the imbalance between supply and demand.

“As the report highlights, an increasing number of people at all stages of their life now rely on the private rented sector. However, with demand far outstripping available supply, there are an average of 15 prospective tenants chasing every rented property, double the pre-pandemic level.

“The impact of rising interest rates and tax increases should not be downplayed. 82% of buy-to-let loans are interest only and the number of buy-to-let mortgages in arrears more than doubled in the final quarter of 2023 compared to the year before. The Institute for Fiscal Studies has said that: “the more harshly that landlords are taxed, the higher rents will be”.

“Ultimately, a healthy rental market is one in which there is a supply of rented housing to meet ever growing demand. Ministers need to act to support the sector by developing pro-growth tax measures to deliver this.”

Generation Rent’s boss – chief executive Ben Twomey – is dismissive of landlord concerns and comments: “Renters have nowhere to hide from the housing crisis. It doesn’t matter what you’re earning: if your landlord thinks someone else would pay a higher rent, then they can demand more from you, and threaten you with eviction if you push back.

“Rising rents mean we have less to put aside for the future, and less to spend on actually living. As well as building more homes and giving enough support through the benefit system, the government needs to stop landlords raising rent beyond what we as tenants can actually afford.”

The Resolution Foundation report claims rent levels for new tenancies have grown by an average 18 per cent since January 2022. 

The think tank claims this has had a big effect on families’ living standards, with the number of families privately renting almost doubling in a generation – from 11 per cent in the late 1990s to nearly 20 per cent today.

Private renting is also no longer the preserve of those in their 20s. The proportion of poorer families headed by someone aged 30-49 that are renting has almost tripled from just 11 per cent in the mid-1990s to nearly 30 per cent in 2021-22.

The Foundation says that popular arguments on what causes rent rises are wide of the mark. 

It says the theory that rising interest rates have pushed up the cost of servicing Buy to Let mortgages – forcing landlords to pass on these costs to their tenants – ignores the fact that landlords’ ability to pass on higher costs is ultimately constrained by the wider rental market. If it were so easy for landlords to unilaterally choose to increase rents, they would likely have done so before 2022, says the foundation.

It says there have also been what it calls ”scare stories about interest rate rises and tougher regulation sparking a mass exodus of landlords from the private rental sector, reducing the supply of available homes.” It says this isn’t true, and claims its analysis of Bank of England research shows that there has only been a very modest shrinking of the PRS since mid-2019, equivalent to just one per cent of the sector.