Rental market “an arid wasteland, picked clean of p...

A business analyst has given a colourful assessment of the shortfall of homes to let, describing the current rental market as “an arid wasteland, picked clean of properties.”

Sarah Coles, senior personal finance analyst at business consultancy Hargreaves Lansdown, says rents are not rising at twice the rate of wage inflation and are “swallowing an incredible 35 per cent of the average single income.”

She says that with small scale landlords “abandoning the market in droves” the situation is set to get worse as energy efficiency legislation will make living conditions better for renters, but also require a scale of expenditure that makes buy to let unviable for many investors, especially on top of steep rises in mortgage payments.

Coles believes that while the number of prospective tenants has boomed, this is likely to worsen further as a growing number of buyers wait to see what’s going to happen to the property market before taking the plunge.

“This not only means renters are staying put, but former homeowners are joining them, while they try to wait out market falls. There’s also a growing gulf between new rentals and renewed contracts – which are up a far more manageable 3.8 per cent in a year. It means more renters deciding to stay in the same property, which makes life even more difficult for new tenants looking for a home” she notes.

She believes renters will have to hope that falling house prices will persuade landlords that now isn’t the time to sell – despite what has happened to mortgage rates.

And quoting recent trends identified by Zoopla, Coles says we’re now seeing a reversal of some pandemic phenomena.

“There has been a boom in rents in big cities, which are enjoying a comeback after the pandemic exodus. Now more people are working from the office for at least part of the time, the reality of the commute is sending many tenants back to the city. Meanwhile, there has also been a rise in demand for one-bedroom properties.

"Unfortunately, this is less positive trend, because it’s largely the result of people being priced out of somewhere larger that may well have suited them better.”

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