The house sales market has at last turned sluggish after the stamp duty holiday boost set house prices soaring during lockdowns, but finding suitable properties to rent has become a nightmare for many people.
For those looking to buy there are still opportunities around, but for those wishing to rent, especially in rural and coastal areas there’s little or no choice.
A severe shortage of rentals
According to the property portals Rightmove and Zoopla, there are listings for just over 600,000 properties in total, with less than one-fifth of these available to let. In rural and coastal holiday hotspots virtually all of the properties on these portals are listed for sale with nothing available for those wishing to take long-term rentals.
Soaring house prices brought on by stamp duty relief, the flight to the countryside during the pandemic, and a stay at home holiday “staycation” boom, all led a dramatic decline in long-term rentals market and a move to short-term holiday lettings. Landlords, already disillusioned with increasing Government regulation and “red tape”, have either been selling up or moving to short-term holiday and Airbnb style lettings.
Life for landlords with long-term tenants has been tough throughout the pandemic. With rent arrears building, difficulties in removing bad tenants and taxation increases making the business less profitable, Rightmove estimates there were nearly 50,000 fewer long-term rental properties available to let in Britain this last summer compared with 2020.
The resulting shortage of rentals around the country is pushing rents up at their fastest pace since 2008. According to Zoopla as reported by The Sunday Times, the average UK monthly rent as of September 2021 was £968, an increase of 4.6 per cent over 12 months before. It’s the strongest rental growth in the previous 13 years. And if London rents, which have generally declined, are removed from the calculation, UK rents are up 6 percent over the same period, a 14-year high.
Government policy needs a re-think
If this dramatic rebalancing of the housing market is here to stay, then the Government has some serious thinking to do on housing policy. Is it sustainable to continually discourage long-term landlords when lifestyle re-locaters are pushing up countryside house prices to such an extent that it is forcing even more middle income occupiers to seek out rentals, rentals that are just not there.
There’s not a lot the government can do about sky high house prices in the short-term, but there’s a serious need for either a crack down on short-term lettings or an investment boost for buy-to-let style housing, or both.
The pandemic rebalancing effect of house price rises has given the regions a boost at the expense of the capital, which the Government will probably see as vindication and encouragement for it’s “levelling up” agenda, but in some locations the price acceleration has been worryingly dramatic.
Regional House prices through the roof!
Take Taunton in Somerset for example, where the average house price has risen by a massive 21.8 per cent according to the Halifax Building Society house price index. Prices in many northern towns are not lagging far behind with, for example, Rochdale at 18.5 per cent.
James Forrester, the managing director, Birmingham-based lettings agency Barrows and Forrester told The Sunday Times that the pandemic has polarised the housing market over the past 18 months: “The property sales market does account for the majority of market activity across the nation and so the current landscape certainly favours homebuyers over those looking to rent,” he says.
Working from home, and workers fleeing the city to live with relatives or rent or buy in the countryside, has not yet subsided as the latest Covid wave testifies, but meanwhile locals are shut-out of their rental markets by outsiders either sitting in rentals waiting to buy or return to the city.
An unbalanced housing market
As long as landlords see the long-term rental market working against them, while they can sell-up at high prices, or favour holidaymakers over long-term tenants, the market is likely to remain unbalanced with a major shortage of homes to rent.
The Sunday Times cites Cornwall with currently over 10,000 active Airbnb listings, while in comparison Rightmove had only 60 around properties available for renting across the whole county last week. Demand for long-term renting is such that in the most seriously hit towns like Cornwall, Kent and Norfolk there are up to 80 tenants chasing every vacant rental.
For many people, those lucky enough to have a secure job and able to work from home, the pandemic has made them better off financially. They have the luxury of living and working comfortably with more space in the countryside, or even buying second homes. But for others, unable to raise the money to buy, and confined to renting, the pandemic property market unbalance is bringing nothing but misery.