This alarming trend was highlighted in a recent analysis, which revealed that in 2023, only 261,542 private rental homes were available per month in the UK, marking a steep decline from the 379,459 monthly average of rental homes available in 2020 โ a drop of 31%, underscoring a worrying trend that has been developing over recent years.
๐ง๐ต๐ถ๐ s๐ฐ๐ฎ๐ฟ๐ฐ๐ถ๐๐ ๐ผ๐ณ ๐ฟ๐ฒ๐ป๐๐ฎ๐น ๐ฝ๐ฟ๐ผ๐ฝ๐ฒ๐ฟ๐๐ถ๐ฒ๐ ๐ถ๐ ๐ผ๐ฐ๐ฐ๐๐ฟ๐ฟ๐ถ๐ป๐ด ๐ฎ๐ด๐ฎ๐ถ๐ป๐๐ ๐ฎ ๐ฏ๐ฎ๐ฐ๐ธ๐ฑ๐ฟ๐ผ๐ฝ ๐ผ๐ณ ๐ถ๐ป๐ฐ๐ฟ๐ฒ๐ฎ๐๐ถ๐ป๐ด ๐บ๐ผ๐ฟ๐๐ด๐ฎ๐ด๐ฒ ๐ฐ๐ผ๐๐๐ ๐ณ๐ผ๐ฟ ๐น๐ฎ๐ป๐ฑ๐น๐ผ๐ฟ๐ฑ๐, ๐๐ต๐ถ๐ฐ๐ต, ๐ถ๐ป ๐๐๐ฟ๐ป, ๐ฝ๐น๐ฎ๐ฐ๐ฒ๐ ๐ฎ๐ฑ๐ฑ๐ถ๐๐ถ๐ผ๐ป๐ฎ๐น ๐ฝ๐ฟ๐ฒ๐๐๐๐ฟ๐ฒ ๐ผ๐ป ๐๐ต๐ฒ ๐ฟ๐ฒ๐ป๐๐ฎ๐น ๐บ๐ฎ๐ฟ๐ธ๐ฒ๐.
Higher interest rates, coupled with a high demand for rental properties, have led to significant increases in rental prices (rising from ยฃ1,343 pcm in 2020 to ยฃ1,739 pcm in 2023 โ an increase of 29%), making it increasingly difficult for tenants to find affordable housing.
The combination of reduced availability and escalating costs creates a challenging environment for renters, finding fewer properties available at higher rents.
The difficulties tenants face are further compounded by the financial pressures on mortgaged landlords, who have seen the affordability of mortgages decline sharply. This has led to a re-evaluation of their business models by some landlords, with a resultant divestment from rental property portfolios in some cases. The impact of this on the market has been profound, with average buy-to-let mortgage rates experiencing a sharp increase, further exacerbating the challenges landlords and tenants face.
๐ง๐ต๐ฒ ๐จ๐ ๐ฟ๐ฒ๐ป๐๐ฎ๐น ๐บ๐ฎ๐ฟ๐ธ๐ฒ๐โ๐ ๐ฑ๐๐ป๐ฎ๐บ๐ถ๐ฐ๐ ๐ต๐ฎ๐๐ฒ ๐๐ต๐ถ๐ณ๐๐ฒ๐ฑ ๐๐ถ๐ด๐ป๐ถ๐ณ๐ถ๐ฐ๐ฎ๐ป๐๐น๐, ๐๐ถ๐๐ต ๐ฟ๐ฒ๐ป๐๐ ๐ฟ๐ถ๐๐ถ๐ป๐ด ๐ฏ๐ ๐ฎ๐ต% ๐ฎ๐ ๐ฎ๐๐ฎ๐ถ๐น๐ฎ๐ฏ๐น๐ฒ ๐ฟ๐ฒ๐ป๐๐ฎ๐น ๐๐๐ผ๐ฐ๐ธ ๐ฑ๐๐ถ๐ป๐ฑ๐น๐ฒ๐ฑ ๐ฏ๐ ๐ฏ๐ญ% ๐๐ถ๐ป๐ฐ๐ฒ ๐ฎ๐ฌ๐ฎ๐ฌ.
The Bank of England has highlighted the potential repercussions of this situation in its financial stability report in the summer of 2023, noting that many landlords are likely to seek a raise in rents to offset their higher costs as they come off their fixed-rate mortgages, thereby exacerbating the difficulties for tenants, particularly those with lower incomes and lower savings.
The supply crunch in the rental market has led to increased competition among prospective tenants, with many properties being let almost immediately to quality tenants. This competition drives rents upwards, making it even more challenging for new tenants to find affordable housing. Additionally, the reluctance of existing tenants to move, fearing higher rents elsewhere, contributes to the shortage of available properties, as fewer tenancies are ending and coming back onto the market.
This situation is particularly acute at the lower end of the price spectrum, where the availability of homes to rent for less than ยฃ1,000 a month has significantly declined, making it even more challenging for those on tighter budgets to find suitable housing.
๐ณ๐ฐ๐ฌ,๐ฌ๐ฎ๐ณ๐๐๐ฏ ยฃ๐ญ,๐ฌ๐ฌ๐ฌ๐ฝ๐ฐ๐บ ๐จ๐ ๐ฟ๐ฒ๐ป๐๐ฎ๐น ๐ฝ๐ฟ๐ผ๐ฝ๐ฒ๐ฟ๐๐ถ๐ฒ๐ ๐ฐ๐ฎ๐บ๐ฒ ๐ผ๐ป ๐๐ผ ๐๐ต๐ฒ ๐บ๐ฎ๐ฟ๐ธ๐ฒ๐ ๐ถ๐ป ๐ฎ๐ฌ๐ฎ๐ฌ; ๐๐ต๐ถ๐ ๐ฑ๐ฟ๐ผ๐ฝ๐ฝ๐ฒ๐ฑ ๐๐ผ ๐ฐ๐ฒ๐ฐ,๐ณ๐ณ๐ฐ ๐ถ๐ป ๐ฎ๐ฌ๐ฎ๐ฏ, ๐ฎ ๐ฑ๐ฟ๐ผ๐ฝ ๐ผ๐ณ ๐ฏ๐ณ.๐ฎ%.
In contrast, the market for premium properties (over ยฃ2,000 pcm) has seen an increase in availability of 52.6% (from 203,502 coming on the rental market in 2020 to 310,516 in 2023), highlighting the stark disparities within the rental market.
The implications of this trend are far-reaching, affecting not only those currently looking to rent but also the broader housing market and the economy.
๐๐ผ๐ ๐ถ๐ ๐๐ต๐ถ๐ ๐ฎ๐ป ๐ผ๐ฝ๐ฝ๐ผ๐ฟ๐๐๐ป๐ถ๐๐ ๐ณ๐ผ๐ฟ ๐ช๐ฎ๐ฟ๐ฟ๐ถ๐ป๐ด๐๐ผ๐ป ๐น๐ฎ๐ป๐ฑ๐น๐ผ๐ฟ๐ฑ๐?
The current property market could present a notable opportunity for Warrington landlords. To do that, we must look at the background statistics and numbers for the Warrington area.
These are the average monthly stock levels of private rental homes in the Warrington area (WA1 to WA5) โฆ
- 2019 โ 711 rental properties per month in the Warrington area
- 2020 โ 582 rental properties per month in the Warrington area
- 2021 โ 477 rental properties per month in the Warrington area
- 2022 โ 501 rental properties per month in the Warrington area
- 2023 โ 467 rental properties per month in the Warrington area
The average rent in the Warrington area in 2020 was ยฃ678 per calendar month; in 2023, it was ยฃ951 per calendar month.
๐ช๐ฎ๐ฟ๐ฟ๐ถ๐ป๐ด๐๐ผ๐ป ๐ฟ๐ฒ๐ป๐๐ ๐ต๐ฎ๐๐ฒ ๐ฟ๐ถ๐๐ฒ๐ป ๐ฏ๐ ๐ฐ๐ฌ%, ๐ฎ๐ ๐ฎ๐๐ฎ๐ถ๐น๐ฎ๐ฏ๐น๐ฒ ๐ฟ๐ฒ๐ป๐๐ฎ๐น ๐๐๐ผ๐ฐ๐ธ๐ฑ๐๐ถ๐ป๐ฑ๐น๐ฒ๐ฑ ๐ฏ๐๐ญ๐ต% ๐๐ถ๐ป๐ฐ๐ฒ ๐ฎ๐ฌ๐ฎ๐ฌ.
The escalation of rental prices signifies a robust income stream for Warrington property investors. This is particularly advantageous in a market where high demand ensures properties are let swiftly, often to quality tenants willing to pay a premium for scarce housing options. For Warrington landlords, this means not only an immediate increase in rental income but also the prospect of sustained long-term profitability as market dynamics push Warrington rents even higher.
Furthermore, the challenging mortgage landscape, with rising buy-to-let mortgage rates with high percentage mortgages, has meant more landlords leaving the market, thereby reducing competition and potentially increasing the demand for existing Warrington rental properties even further.
This unique set of circumstances presents an opportune moment for current and prospective landlords to capitalise on their Warrington property investments, leveraging the tight supply to secure higher rental yields and enhance the attractiveness of their property portfolios.
๐ช๐ต๐ฎ๐ ๐ฎ๐ฏ๐ผ๐๐ ๐ช๐ฎ๐ฟ๐ฟ๐ถ๐ป๐ด๐๐ผ๐ป ๐๐ฒ๐ป๐ฎ๐ป๐๐?
As the UK grapples with this challenging rental market landscape, a multifaceted approach is needed to address the underlying issues. This includes considering the impact of mortgage costs on landlords, the affordability of rents for tenants, and the overall availability of rental properties.
The Government need to build more homes. Yet excluding land, the building costs in the UK start from ยฃ163 per square foot. A 3-bed semi is a minimum of 1000 ft.ยฒ. The most conservative estimate shows that Britain is approximately 2 million households short now, meaning the bill for those additional 2 million homes would be ยฃ326bn (excluding the land). For context, the NHS costs ยฃ181bn a year!
The Government currently spends ยฃ17.35bn a year on housing, which would need to increase to ยฃ49bn a year for the next ten years to pay for those 2 million homes. To give you an idea of what that would cost taxpayers โฆ
๐๐ป๐ฐ๐ผ๐บ๐ฒ ๐๐ฎ๐ ๐๐ผ๐๐น๐ฑ ๐ป๐ฒ๐ฒ๐ฑ ๐๐ผ ๐ฟ๐ถ๐๐ฒ ๐ฏ๐ ๐ฑ.๐ด๐ญ๐ฝ๐ฒ๐ป๐ฐ๐ฒ ๐ถ๐ป ๐๐ต๐ฒ ๐ฝ๐ผ๐๐ป๐ฑ ๐๐ผ ๐ฝ๐ฎ๐ ๐ณ๐ผ๐ฟ ๐๐ต๐ผ๐๐ฒ ๐ฎ๐ฑ๐ฑ๐ถ๐๐ถ๐ผ๐ป๐ฎ๐น ๐ฎ ๐บ๐ถ๐น๐น๐ถ๐ผ๐ป ๐ต๐ผ๐บ๐ฒ๐!
That is the equivalent of an extra ยฃ991 per year for every taxpayer for the next ten years โ not a vote winner! Yet without significant Government intervention and strategic planning, the difficulties tenants face in finding affordable homes will likely persist, with potential long-term implications for the housing market and the broader economy.
Meanwhile, British landlords must pick up the pieces and continue to buy properties. Unfortunately, it is the nature of the game that with limited supply and increasing demand, prices (i.e., rents) go up. My heart goes out to Warrington tenants having to pay these increased rents, but the market is the market, and we cannot control that. It has been proved beyond doubt, in Scotland and around the world, that rent controls do more harm than good, so I hope that the Government grasps the nettle and finally does something to sort our housing issues once and for all in the medium to long term.
