The private rented sector is under threat. After years of tax changes that make it less appealing to be a landlord, the Renters’ Reform Bill is now causing many landlords of houses in multiple occupation (HMOs) to worry about the future by abolishing section 21 evictions. 

Then there is the cost-of-living crisis, which means many landlords are facing rising mortgage rates at the same time as uncertainty over rental income is increasing.

The result of the changes over the past few years has been a fall of nearly 50% in the number of properties available to rent. Propertymark reports that approximately 30 properties were available to rent per estate agent branch in March 2019, whereas by March 2022 that figure had dropped to just 15.6. In London the figures are even more dramatic, with Chestersons reporting a drop of 38% in the number of available rental properties between July 2021 and July 2022, while tenant enquiries increased by 60% over the same period.

From the renters’ perspective, the diminishing number of landlords is making for fierce competition when it comes to finding somewhere to live. According to UK rental guarantor service Housing Hand, this is leading to heightened inequality in the rental sector, with tenants who can offer to pay rent upfront gaining a distinct advantage when it comes to securing their desired property.

All this comes at a time when the Centre for Economics & Business Research projects that 407,000 families – equating to nearly one in ten tenant households in England – will fall into rent arrears this year as the cost-of-living crisis continues to ratchet up the pressure. That’s a 31% increase compared to the number of households who got behind on their rent during the first year of the pandemic.

Housing Hand is supporting renters to access accommodation while also providing landlords with the assurance that their rent will be paid. The company provides rental guarantor services that guarantee the tenant’s rent for the whole of their tenancy, providing peace of mind to both parties.

To level the playing field in terms of access to rental homes, meanwhile, Housing Hand is working with Canopy to support renters who don’t meet traditional referencing requirements. While renters usually have to earn 2.5 to 3 times the annual rental amount in order to be eligible to rent a home, with Housing Hand, they need just 1.5 times net earnings to qualify. Housing Hand then serves as the individual’s rent guarantor.

Meanwhile, Housing Hand has invested in new technology and processes to speed up the pre-validation element of its service. This means that renters have gone from waiting 48 hours for pre-validation checks to complete to just 48 seconds. Again, this is supporting more equitable access to rental properties.

Rent Growth Exceeds 2% For The Second Quarter In Row, Says The DPS

Average UK rents rose by more than 2% for the second quarter in a row during Q3 2022, according to The Deposit Protection Service (The DPS).

The UK’s largest protector of deposits said that average rents in the country during Q3 2022 increased by 2.18% (£19) to reach £889, an increase of 8.68% (£71) since Q3 2021.

The organisation also said that rents in London accelerated by 4.24% (£61) to £1,499 during Q3 2022 and that average rents in the capital increased by 11.95% (£160) between Q3 2021 and Q3 2022. The UK’s current annual inflation rate is 10.1%.*

Matt Trevett, Managing Director at The DPS, said: “Rent increases continued across the UK during Q3 2022 as a result of well-documented shortages in rental stock and general increases in the cost of living.

“Ongoing demand for larger properties in London, as well as flats during the past 12 months is driving the significant rent increases we’re seeing in the capital.

“In order to secure a property, tenants are still willing to pay historically high rents.”

Paul Fryers, Managing Director at Zephyr Homeloans, a specialist buy-to-let mortgage provider also part of the Computershare group, said: “Increases in the cost of living and property finance mean that landlords are facing higher maintenance, insurance and other costs.

“It’s more important than ever that brokers do all they can to source the right mortgage deal for their landlord customers.”

The DPS said that five regions – Yorkshire, the North West, and East Midlands, as well as Northern Ireland and the East of England – saw rent increases of more than 2% during Q3 2022.

Rents in Scotland increased by £59 (8.91%) to £721 between Q3 2021 and Q3 2022,  said The DPS.

The organisation added that rents in the North West increased by £57 (8.98%) to £692 during the same period.

Across the UK flats saw the greatest percentage rent increase between Q3 2021 and Q3 2022, up £79 (9.52%), from £830 to £909.

The organisation reported in July that average UK rents reached £870 during Q2 2022, an increase of 2.47% (£21) compared with Q1 2022.

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