• About us
  • Properties
  • Agents
  • Blog
  • Other Services
Request a callback

  • About us
  • Properties
  • Agents
  • Blog
  • Other Services

  • About us
  • Properties
  • Agents
  • Blog
  • Other Services

What’s causing the shortage of rental listings?

  • Home
  • Propertalis Property Blog
  • Estate Agent
  • What’s causing the shortage of rental listings?
Property price trends, houses in Kensington & Chelsea
Property Price Trends in Kensington & Chelsea
January 21, 2021
Fulham and Chelsea houses
Should I buy a big house in Fulham or a flat in Chelsea?
May 30, 2022
Published by Simon Banks
Categories
  • Estate Agent
  • Landlord
Tags
  • Rental listings
  • UK rental market
shortage of rental properties

Rental listings are down 45 per cent on the five-year average, according to Zoopla. The first three months of 2022 have seen a global rental shortage, with the UK, in particular, experiencing a stock issue. Here, we look at why this is happening and what might be causing the shortage of rental listing in the capital.

Is it the pandemic?

Certainly, London hasn’t reached pre-pandemic levels in terms of footfall. Work-from-home measures remain, with fewer people needing rental accommodation in the capital as they stick to more rural areas. 

Yet, the issue isn’t one of demand. Indeed, rents increased by 8.3% in the final three months of 2021. It was the steepest rise in 13 years,  so the problem doesn’t rest with fewer people wanting homes to rent. Instead, it’s the number of landlords listing properties on the market where the issue lies. 

Why the shortage in rental listings?

Stamp duty surchargeLondon period houses

The additional 3% stamp duty for second-home owners (including landlords) was introduced in 2016, some six years ago. Yet, its effect is far-reaching and still impacts the rental market in the UK today. 

The government has been urged to scrap the scheme by the National Residential Landlords Association (NRLA) to boost supply in the housing market. NRLA argues that removing the surcharge would encourage investors to return to the market. So far, thousands of landlords have left the buy-to-let market since the new stamp duty criteria came into effect in 2016. 

Tax relief changes

If one change wasn’t enough, landlords were hit with a double blow during the infamous buy-to-let shake-up announced in 2015. Along with a stamp duty surcharge, all tax relief from mortgage interest payments was scrapped.

Previously, investors could claim against the interest paid on their buy-to-let mortgage. As of 2022, that relief has been phased out and replaced with a standard 20%. It makes buy-to-let investing seem less attractive as landlord costs rack up, and it’s still arguably one of the primary contributing factors to the shortage of rental listings we see at the moment. 

No new buildings

In the last few years, the number of rental properties built in the capital has fallen. The city is dense, and available space to build new homes is scarce. It has even reached the point where some developers are looking at the possibility of extending upwards due to the lack of available land. 

On top of that, the impact of the pandemic has been felt across the capital. Fewer homes built means the number of available properties to sell and let decreases, with a growing number of tenants vying for a smaller amount of homes. 

Changes to HMO

HMO (houses of multiple occupation) has long played an important role in London’s rental housing market. Now, changes to HMO licensing have to come into effect with homes housing sharers of more than two. New build London

Many councils are also making amendments to their HMO licensing, including Westminster. The borough has the largest private rental market in London and now requires licensing for all HMO properties. Previously, it wasn’t mandatory for landlords of HMO until five or more people shared a home.

Compliance

Many landlords are put off by the requirements needed to run a buy-to-let property. New compliance measures, such as the extension to smoke alarm regulations and electrical safety tests, have essentially made being a landlord a part-time job rather than one where they earn passive income. 

The number of documents and certificates you’re required to keep track of is rising. Plus, the added costs of having compliance tests undertaken have led to smaller profit margins for many landlords. Consequently, there is a growing number leaving the market.  

Lack of help-to-buy policies

Housing is only becoming more expensive, and there’s a lack of schemes designed to help renters and landlords buy homes. This is an issue for renters, in particular, as it drives up the demand for rental homes.

If, however, it was easier to get on the property ladder, demand would lower, and more properties would be available on the market. Landlords should also be incentivised to invest in bricks and mortar, as they have an important role in the housing market and provide high-quality homes for people. 

What’s the answer?

Those in charge of housing need to make some bold decisions, giving both renters and landlords reason to be cheerful about the property market. From a landlord’s perspective, removing stamp duty surcharges and offering tax relief would go a long way to bring confidence back to the market. 

While renters need more incentives to buy homes, thus freeing up the number of properties available. Right now, it’s the perfect storm contributing to high demand and low supply. But the right initiatives could change that, providing the right balance between stock and demand, so everyone wins.

Share
0

Related posts

Central London property
June 22, 2022

London’s property families, and why they are so unique


Read more
London housing
June 15, 2022

Tips from landlords: when is it time to sell, and how can you do it quickly?


Read more
London skyline
June 3, 2022

Why London is still one of the best property hotspots in the world!


Read more

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Propertalis

A London real estate agency made by people and powered by tech.

We match you with a personal estate expert, individually invested in your property and willing to go the extra mile to get you the best deals.

Quick Links

  • → Cookie Policy
  • → Privacy Policy
  • → Blog
  • → Terms of Use
  • → Subscribe

Contact

 7 Wilbraham Place, SW1X 9AE, London

 +44 7541 493308

 hello@propertalis.com

Social

           
© 2020 Propertalis. All Rights Reserved.
      We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
      Cookie settingsACCEPT
      Privacy & Cookies Policy

      Privacy Overview

      This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
      Necessary
      Always Enabled

      Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.

      Non-necessary

      Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.

      Thank you for your message.

      We received your request and our team will be in touch soon.

      Thank you, Propertalis.

      Free valuation from a Local Property Expert

        *mandatory field

        I am thinking to
        Sell
        Let
        Just curious

        Contact us for more information

        If you would like to discuss our services or would like any further information please fill in the form below and I will be in touch.

        Alternatively, you can call us or send a message on +44 7541 493308

          *mandatory field

          Book Viewing

            *mandatory field

            Contact us for a free consultation

            If you would like to discuss our services or would like any further information please fill in the form below and I will be in touch.

            Alternatively, you can call us or send a message on +44 7541 493308

              *mandatory field

              Contact us for a free consultation

              If you would like to discuss our services or would like any further information please fill in the form below and I will be in touch.

              Alternatively, you can call us or send a message on +44 7541 493308

                *mandatory field

                Request a Callback

                We want to help since day one.
                Receive free expert advice to sell, let or manage your property in the best possible way.

                  *mandatory field

                  Get a free advice from Edmond

                    *mandatory field

                    I need help with
                    The value of my propertyManaging my property
                    Finding a good tenantFinding a buyer

                    Get free advice from Adi

                      *mandatory field

                      I need help with
                      The value of my propertyManaging my property
                      Finding a good tenantFinding a buyer

                      Get free advice from Georgie

                        *mandatory field

                        I need help with
                        The value of my propertyManaging my property
                        Finding a good tenantFinding a buyer

                        Book a valuation

                        Receive transparent advice about your property with an ambitious yet achievable valuation.

                          *mandatory field