A crisis may be on the horizon for the private rental market, as new figures show a sharp drop in supply over the last year.
The latest Residential Market Survey by the Royal Institution for Chartered Surveyors has been released. It shows a net balance of -29% of surveyors reporting a fall in landlord instructions. This is twice the negative rating that was reported in November 2018.
The report on the survey points out that market activity has turned stagnant ahead of the General Election. Its highlights also include:
- Buyer enquiries and new instructions continue to fall, although the pace of decline eases
- Near term sales expectations turn marginally positive for the coming three months
- Respondents anticipate prices will return to growth over the next twelve months
With tenant demand continuing to increase, RICS predicts that this will lead to rent increases of around 2% over the next year and around 3% a year over the next five years.
David Smith, Policy Director for the Residential Landlords Association, has responded: “If the decline in the supply of new homes to rent continues to fall whilst demand is still rising, this is going to lead to a crisis in some areas as tenants desperately search for somewhere to live.
“This is all the result of increased taxation and other measures over the last three years and the result has been highly predictable as we said it would be.
“The new government needs to urgently address the problem and make changes in the forthcoming budget to relieve the pressure on landlords and encourage new investment to meet the demand.”