A prominent property analyst says next year could get “very ugly” for landlords.

Doug Shephard, editor of the Home.co.uk website, warns that a recent Bank of England report suggests personal financial circumstances for renters and lower income households are deteriorating, albeit only slightly, with rent arrears showing an upwards movement.

Add to that the problems faced by landlords in the southern half of England in particular – highlighted in Home’s latest housing market snapshot – and the position looks very challenging.

Shephard’s data suggests that rental growth across England and Wales is actually just 0.8% annually but this masks vast regional differences – rental growth in some parts of the north of England is in double digits, while in London typical rents have actually fallen in the past year by 1.9%.

Indeed in two London boroughs – the City of London and Hackney – the rent falls over the past year have been in excess of 9%.

Elsewhere in the Home market report, which paints a depressing if accurate picture of life as a landlord right now, the sales market is shown to be affected by the sell-off of buy to let properties. 

Shephard writes: “Whilst expectations of lower interest rates going forward have buoyed confidence in the [sales] market, fears of increased taxation and restrictive legislation persist, especially among landlords. Consequently, we expect landlords to continue to offload their least profitable properties, thereby adding to sales supply but reducing rental property availability.”

He goes on to say: “The forthcoming hike in stamp duty for first-time buyers (31st March 2025) is likely to cause a burst of buyer activity over the next quarter. Consequently, prices look set to rise at least until this deadline. 

“It remains to be seen whether or not they will then continue to rise into the summer months, as this will be largely dependent on the Bank of England’s Monetary Policy Committee decision on a base rate cut. The contents and the progress through parliament of the Renters’ Rights Bill will also probably affect the market.”

You can see the full report here.