Renters will struggle if life gets more difficult, an analyst has warned.
It comes as the latest RICS Residential Market Survey shows new landlord instructions in August once again saw a negative trend, with the net balance slipping to -21% from -9% in July and more agents are expecting rents to rise.
Near-term rental price expectations continue to point to a steady increase in the months ahead, returning a net balance of +39%.
This is compounded by rising demand and a lack of supply.
Anecdotally, agents said landlords were selling up due to first of tax changes and the end of Section 21 notices.
In response, Hargreaves Lansdown personal financial analyst Sarah Coles said: “There’s no light at the end of the tunnel when it comes to the availability of properties or runaway rents.
“Tenant numbers may be rising more slowly, but they’re still climbing at a time when landlords continue to flee the market. Some of the agents are now reporting a surge in landlords selling up because they’re worried about potential changes to capital gains tax in the forthcoming Budget – which could simultaneously push ruinous rents up even higher and keep a lid on property prices in the sales market.”
She suggests that the Renters’ Rights Bill is causing concern among landlords, adding: “They say this could mean more landlords deciding to sell up, to protect themselves from being stuck with tenants from hell, so that rental properties are even thinner on the ground.
“The HL Savings & Resilience Barometer shows that renters can ill-afford for life to get more difficult. The percentage of renters who are behind on debt repayments or bills is up 3.5% from pre-pandemic levels, and the percentage who are worried by their debts has risen 10 points. Rising rents are only going to make it harder.”
Simon Rubinsohn, chief economist for RICS, added: “Affordability remains an issue in the sales market even with somewhat cheaper finance now available but the picture appears even more acute in the lettings market where the amount of rental stock continues to diminish. Contributors continue to point to landlords looking to scale back their portfolios which will inevitably increase the imbalance that already exists in the market”.
