The Rental Market: Supply & Demand- UK Letting Market Faces Troubling Times

The letting market in the UK is heading towards troubled times again. The pandemic is over, and workers are returning to offices, fueling demand for rented homes. This has resulted in a sharp increase in rents, and many landlords unable to cope with the loss-making situation are selling their properties. To add to the industry’s problem, there is a growing shortfall in social housing.

Growing Demand and Limited Supply

Property experts agree that the rented homes market faces stressful times as demand grows, and supply remains perennially short. With the return to offices for many workers, many of whom can’t afford the rising rents, the government faces a huge challenge in addressing this issue. The government has committed to legislating and reforming the market in a manner that will help renters and create higher standards of rental accommodation.

Challenges in Improving Supply

One of the key issues is that removing tax relief on interest payments will not help improve supply. In fact, it creates more problems for landlords. The focus must shift towards improving supply through legislation and creating policies that support this. While the Build to Rent model is a viable option, it will take time to come through due to many bottlenecks inhibiting the speed of delivery.

Landlords Struggling with New Regulations

As many landlords exit the market, they cite the inability to comply with new energy regulations, such as the energy performance certificates (EPC), and the changing tax rules. This shortage of homes will only worsen as landlords are required to make costly investments in upgrading their properties to meet these regulations. Many must spend heavily installing new windows, boilers, and related fixtures, with the cost of materials having significantly increased.

Overseas Investors Entering the Market

While many landlords are selling their properties, overseas investors are starting to enter the market. These investors are cashing in on the situation as rents continue to surge. However, the problem of housing shortages is expected to persist as landlords struggle with tax implications and regulatory compliance. This adds further pressure to an already strained rental market.

How Tenants and Landlords Can Adapt

Property experts urge tenants to be proactive to improve their chances of securing a rental home. Waiting for a response from any portal is not advisable. For landlords, using a reputable real estate expert or agent to manage their property is essential. With the complex new legislation, landlords will find it challenging to navigate independently, and an experienced agent can help them secure the best rent for their property while keeping tenants happy.