According to a recent survey by Hamptons International, an estate agent owned by Countrywide, the total amount of rent paid to landlords has fallen for the first time in more than a decade.
For years landlords have enjoyed a rising market, with landlords in the capital for example seeing rental income increase by £10.5 billion over the past decade.
However, notwithstanding the fact that average rents rose by 0.4 per cent last year, fewer people renting homes meant the total “rent bill” declined by £1.9 billion to £59.1 billion in 2018.
We think the data is robust as it comes from Countrywide’s monthly lettings index which tracks achieved rents across the 90,000 homes let and managed by the group each year.
What’s behind the drop off?
There are a number of factors behind the drop in the rental bill and the most significant ones derive from a combination of government interventions:-
Firstly, more people have been buying homes, aided by the government’s Help to Buy scheme and a relaxation of lending conditions. The number of mortgages issued to households last year rose by 5 per cent to 6.9 million, the first time the figure has risen in a decade. Conversely, the number of households renting privately fell by 3.5 per cent on the previous year to 4.5 million.
Secondly, as our HomeRenter customers will appreciate only too well, the rental market is also facing a reduction in the number of buy-to-let landlords, with the total having declined by 120,000 in less than the three years since stamp duty reforms were introduced in April 2016 by the former chancellor George Osborne.
The HomeRenter view
We don’t believe this news in any way sounds the death knell for the private rental sector but, rather, represents a correction attributable to direct intervention by government. From our own experience we can see that affordability very much remains an issue for tenants. And whilst significant numbers of private landlords have sold down portfolios reducing the number of private properties to rent, those landlords committed to the sector have chosen not to raise rents as much as they might have done.