Private landlords leaving the rental market, new research shows

Private landlords look to be leaving the rental market at a record pace, according to research from the property website Rightmove.

It says rising costs, taxes and legislation are making it more attractive for some landlords to sell up.

But will this prove to be a problem or an opportunity for private tenants?

Landlords leaving

Rightmove says it’s the UK’s biggest property portal, and it’s been combing through homes currently listed on its website.

It’s found that 18% of properties that are now for sale were previously offered for rent.

That 18% share is the highest that Rightmove has seen since it started measuring the number back in 2010 – when the share was just 8%.

And the trend is even more pronounced in London – where 29% of homes for sale were once down as places to rent.

Landlords say this shows a “worsening crisis” in private renting. The National Residential Landlords Association today warned that every rental home that is sold “exacerbates the imbalance between supply and demand.”

And that imbalance has become dramatic in recent years. Rightmove reports that in August there were an average of 19 enquiries for every rental property. That’s better than a year ago, when it was 28! But pre-Covid, it was just 9.

Landlords claim a raft of changes are encouraging landlords to sell up: rising interest rates have pushed up their mortgage payments and there’s speculation they could have to pay more capital gains tax in the future (giving them an incentive to sell their properties now).

Opportunity?

But could it also bring an opportunity for hard-pressed tenants? Could it mean that some renters could become buyers and snap up those properties that landlords don’t want anymore?

Rightmove says “…these homes could provide first-time buyers with more choice.”

If that happened, it would start to reverse one of the most fundamental changes in the housing market (and UK society) over the last 3 decades.

In the year 2000, 10% of all households in England were private renters. By 2023, that share had nearly doubled to 18.8%.

And as the number of private renters has grown, the number buying their property with a mortgage has shrunk: from just over 42% to just under 30%.

The big question is how many renters are in a position to buy.

Research last month from Hargreaves Lansdown, a private investment company, found that the average rent in Great Britain was £1,279 a month.

But it calculated that a person buying a first-time property with a 10% deposit could face a monthly payment of £1,208.

That suggests that the gap between renting and borrowing is not huge when it comes to the monthly mortgage payments.

But Hargreaves Lansdown points out that the problem will be the deposit: 10% of the £241,502 average house price for a first time buyer or £24,150. Its research shows that the average rental household has £79 left at the end of the month – so that deposit looks a very big mountain to climb.

Renters rights

Generation Rent, who campaign for renters’ rights, agree that there could be an opportunity for some renters to become buyers and say it would be a fundamental shift from what’s happened over the last 2 decades.

Dan Wilson Craw, their spokesperson, told Channel 4 News it was inevitable that landlords will have to sell up to realise government talk of re-igniting home-ownership. His concern is how that transition happens.

He’s concerned that landlords trying to sell will evict their tenants – so they have an empty property to market. He wants protection against that in Labour’s promised Renters’ Rights Bill.

But his big ask is that the experience of renting should be better – even if you don’t hope to buy one day. He argues for an end to no-fault evictions, but he also wants a system to prevent unaffordable rent increases – linking them to whichever is the lowest of inflation or wage increases.

So both renters and landlords accept there may be some opportunity for a transfer of property.  But the other thing they agree on is that the problems of the housing market are not just about changing the ownership of existing properties. There still needs to be a substantial increase in the number of homes being built – whether to buy or rent.