People who can’t afford to buy a house have no choice but to rent properties. These alongside the legislative changes in the sector mean that the number of rental properties is decreasing.
Scotland has seen the highest fall with a 34.7% decrease in available properties to rent between July 2001 and June 2017 whilst Wales has seen a fall of 28.1% while the South West has seen a decline of 26.5%.
In general, 7 out of 11 UK regions saw a fall in excess of the UK average including a decrease of 24.6 in the East Midlands, a fall of 20.8% in the South East and a drop of 16.7% in the West Midlands.
Only the North East saw a rise in rental properties with 33.4% properties available to rent.
Whilst this is good news for the North East, some landlords are still selling up or downsizing their portfolios to avoid making a loss which results in the fall in supply of available properties to let.
Buy-to-let landlords are unable to offset their mortgage interest against their profits since April 2017 and none of this interest will be tax deductible over the next three years. In addition to this, the recent hike in Stamp Duty Land Tax has affected landlords in the UK.
Due to these changes landlords have had to raise their rents. Property rent in Wales increased by 11.3% over the last year and during the same period Yorkshire has seen rents rise by 8.4%. In the last six months, Scotland has seen an increase of 5.4% in the average rent.
In the South West, rents are up 5.7% over the last 12 months while in the South East, the average rent increase is 0.9%. In the East Midlands, the rise over the same period has been 4.5%.
From April 2016 to March 2017, the recorded median monthly rent in England by the Valuation Office Agency was £675. The median rent in London of £1,495 was more than double the English median rent whilst the North East has the lowest median rent of £495.
The government’s justification for tax changes in the private rental sector was to ‘level the playing field’ for aspiring homeowners. However, the result of the tax changes has meant that the supply of rental properties has fallen behind demand in most regions and therefore driving up rents.