The UK has seen an 11.6% decline in the number of properties available to rent over the last six years, due to landlords selling their portfolios to avoid making a loss and changes in the way buy-to-let investments are taxed
According to Home.co.uk, Scotland has seen the biggest fall with a 34.7% decrease in available properties to rent between July 2001 and June 2017. Wales has seen a fall of 28.1% while the south west has seen a decline of 26.5%.
Overall, seven out of 11 UK regions saw a fall in excess of the UK average. This includes 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.
Due to people no longer being able to afford to buy they have no choice but to rent, this along with legislative changes in the sector mean that the number of rental properties available are falling.
Some landlords are selling up or downsizing their portfolios simply to avoid making a loss, resulting in falling supply, and those that remain in the sector are forced to raise their rents.
From April 2017, buy-to-let landlords are unable to offset their mortgage interest against their profits and over the next three years none of this interest will be tax deductible. The recent hike in stamp duty land tax (SDLT) has also hit landlords.
Due to these changes landlords have had to raise their rents. Wales has seen rents increase by 11.3% over the last year and, during the same period, Yorkshire has seen rents rise by 8.4%. In Scotland the last six months have 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% and in the East Midlands the rise over the same period has been 4.5%.
From April 2016 to March 2017 the median monthly rent in England recorded by the Valuation Office Agency was £675. The median rent in London (£1,495) was more than double the English median rent with the North East having the lowest median rent at £495.
Home.co.uk director Doug Shephard said: ‘It is ironic that the government’s justification for tax changes in the private rental sector was to ‘level the playing field’ for wannabe homeowners. The result of this barrage of red tape and taxation, at both local and national government levels, has meant that the supply of rental properties has fallen behind demand in most regions thereby driving up rents.
‘The “elephant in the room” for the government is that record low mortgage interest rates have driven unprecedented investment in the private rental sector over recent years. Simply put, those already with significant home equity have been able to come up with deposits for properties intended to let whilst aspiring homeowners are as cash-strapped as ever as they pay out huge sums in rent. However, ultra-low interest rates and the associated pain for renters look set to persist for the foreseeable future.’
Over 285,000 homeowners, including 240,000 first time buyers, were able to buy their homes with support from the government’s Help to Buy schemes. The average house price across the scheme is £193,826, which is below the average UK house price, and 90% of completions have taken place outside of London.
Stephen Barclay, Economic Secretary to the Treasury said: ‘We want to make sure that anyone who works hard and aspires to own their own home has that opportunity. That is why I am delighted that our Help to Buy schemes have now helped over 240,000 first time buyers across the country achieve home ownership.’
More than 120,000 completions have now taken place through the Help to Buy Equity Loan scheme, which offers buyers up to 20% of a newly-built home’s costs so they only need to provide a 5% deposit.
The North West, Yorkshire and the Humber, and the South West have seen the highest number of property completions using the Help to Buy: ISA. In total, 62,528 completions across the UK using the ISA bonus have taken place since launch in December 2015.