A newly published report by the RICS has highlighted the scale of the problem about to hit the private rental sector. Experts predicted that many landlords would sell up as soon as government tax changes began to bite, but now it seems they are leaving in record numbers.
Falling Rental Stock
22% of RICS members have noticed a fall in the number of private rental properties in their area. In addition, landlords are not buying new properties. Experts suggest that it is mostly smaller landlords who are leaving the sector, as it is harder for them to generate a profit in a challenging market.
Many of them are mortgaged and the loss of mortgage interest tax relief is catastrophic. Some accidental landlords who have properties spare are not bothering to let them out because of the extra costs involved.
Rents Predicted to Increase in Some Areas
The RICS is predicting that a decrease in the number of properties for rent in some areas will push up rents, as there has been no decrease in the demand for rental accommodation. If anything, in some areas, demand has risen. The RICS suggests that rents could increase by as much as 15% by 2023, with the South West and East Anglia likely to be the hardest hit.
This will have a huge impact on poorer households who are not able to buy their own property and these are the people who will struggle the most with rising rents.