Private sector tenants are continuing to struggle as new data highlights an ongoing shortage of homes to rent.

No fewer than 77% across England and Wales reported strong demand from prospective tenants in the final quarter of 2024 according to research from Pegasus Insights.

The data, compiled for the National Residential Landlords Association (NRLA), suggests demand is highest in South West England. 81% of respondents in the region reporting strong demand. This was followed by 80% who said the same in the South East and the North West.

Despite strong tenant demand, across England and Wales, 20% of landlords said they had sold property over the previous 12 months. This was almost three times more than the 7% who said they had purchased new properties to rent.

Looking ahead to the next 12 months, 41% of providers of rental housing say they plan to cut the number of properties they rent out, compared to just 5% saying they will increase the number.

The figures follow government data which show that selling property is the single biggest reason for bringing a tenancy to an end, and almost three times bigger than the next most common reason.

With demand far outstripping supply, the impact will be felt most acutely by those in receipt of housing benefits, as the support they receive to cover their rents is set to be frozen from April this year.

The NRLA is calling for pragmatic steps to boost the confidence of responsible landlords to stay in the market and sustain tenancies. As a result, it wants the government to:

• Scrap the disastrous stamp duty hike on the provision of new homes to rent in the Budget last year. Paul Johnson, head of the Institute for Fiscal Studies has warned the hike will: “reduce the supply of rental housing and so increase rents”;

• Propose a clear plan to ensure the courts more speedily process legitimate possession claims when Section 21 repossessions are ended by the Renters’ Rights Bill. This needs to include further investment in the justice system as called for by The Law Society; and

• Reverse the decision to freeze housing benefit rates to support those on low incomes into rented housing.

Ben Beadle, chief executive of the NRLA, says: “Plans to improve security for tenants will mean nothing if the rental accommodation they need is not there in the first place. Tenants right across the country are feeling the effects of a lack of housing across the board, including with respect to the privately rented properties. Without change, the situation is only going to worsen. We need policies that genuinely support those who provide decent quality homes to rent. 

“Tax hikes which penalise those wanting to provide such homes need to be scrapped. What’s more, those providing homes to rent must have the confidence to stay in the market when the Renters’ Rights Bill is passed. At present that confidence simply is not there.”