Dwindling supply: Cars are parked outside residential properties at Primrose Hill in London. The RICS said sales are falling at an accelerating pace and buyer demand is weakening in most parts of the United Kingdom. — Reuters
LONDON: UK estate agents are reporting the most widespread decline in rental properties since the pandemic as the prospect of higher taxes and tighter regulation prompts landlords to exit the market, a closely watched survey finds.
The Royal Institution of Chartered Surveyors (RICS) said its gauge of lettings coming to market plunged to minus 37 in August, the worst reading since April 2020 when the economy was brought to a standstill by Covid.
Rents are forecast to increase another 3% over the next year as tenants compete for a dwindling supply of homes.
The findings deliver more bad news for those forced to rent because they cannot afford the United Kingdom’s sky-high house prices.
Official figures show rents have soared 30% over the past four years, with tenants in London now paying £2,250 (US$3,048.6) a month on average – intensifying the cost-of-living pressures facing many households.
The supply squeeze indicates that fears of a landlord exodus – triggered by government legislation aimed at tipping the balance in favour of renters – are starting to materialise.
There is also mounting speculation that Chancellor of the Exchequer Rachel Reeves will squeeze landlords to balance her books at the Nov 26 budget by subjecting rental income to national insurance tax.
Estate agents warn that Labour’s efforts could end up backfiring.
While rent inflation has eased from last year’s dramatic levels, most surveyors expect the cost to keep rising.
Private renters are already suffering more than homeowners from the recent surge in inflation, according to official data.
“Speculation about applying National Insurance to rental income is adding to landlord concerns, on top of recent legislative changes that have already made the rental market less appealing,” said Tarrant Parsons, head of market research and analysis at RICS.
“The potential for further taxation is likely contributing to decisions to leave the market, reducing rental supply and driving up rents.”
The RICS report also pointed to further deterioration in the sales market.
Defying expectations of a slight improvement, its index tracking house prices tumbled to minus 19 in August, the lowest since January 2024, with further price declines expected in the next three months.
Sales are falling at an accelerating pace and buyer demand is weakening in most parts of the United Kingdom, surveyors said.
“Concerns over the wider economic and fiscal outlook, combined with questions around the future path of interest rates amid stubbornly high inflation, are weighing on sentiment at this time,” Parsons said. — Bloomberg
