The latest Royal Institution of Chartered Surveyors (RICS) Residential Market Survey shows rental demand continuing to grow and outstrip supply.
September saw 22% of respondents showing growing demand, but a further drop in properties listed for rent, with a 29% retreat.
RICS says this trend is further influenced by some landlords listing their properties for sale before potential CGT rises. Unfortunately for renters, the continuing squeeze on supply will likely mean further rent rises and difficulties finding property.
The institution says that nonetheless there appears to be a greater level of positivity in the lettings market, likely connected to recent interest rate cuts by the Bank of England and a growing belief that more will come in the next few months. A potential rise in CGT is also compelling some homeowners to add their properties to the market, however this is unfortunately contributing to a lack of supply for renters.
RICS reports that the sales market continues to pick up. The September 2024 survey found that demand, sales, and new listings had all returned to growth, while sentiment related overall national house price growth for the first time since October 2022. The outlook also looks broadly positive.
Overall demand from buyers recorded a 14% result (net balance), the third month in a row indicating growth. Sales sentiment also saw a rise, although more marginal (5% net balance). Near-term, a net balance of 23% of respondents believes the sales market will continue to grow over the next three months, while longer-term twelve-month growth sentiment is even stronger (45%).
New listings are also up, encouraging a growing demand. This is a clear rise from the previous month’s +9% result, indicating a readily available supply of property for sale. Respondents also cited potential rises in Capital Gains Tax (CGT) encouraging homeowners to list their properties for sale.
Additionally, according to respondents, house prices are growing overall at a national level for the first time in two years, although some regions are seeing less of a rise – West Midlands, the South West and East Anglia. September’s survey posted a 16% national price reading, up from a flat 0% result in August and positive for the first time since October 2022.
RICS president Tina Paillet says “as we approach the 100-day mark of the new government, it is encouraging to see housing prioritised so strongly. The government has moved quickly to outline ambitious planning reforms and set housing targets aimed at increasing supply. Proposals for new towns, urban expansions, and the creation of ‘greybelt’ land demonstrate a clear commitment to addressing the country’s housing challenges.
Now, it is crucial for developers and investors to feel confident that these reforms will not create planning, skills and resources bottlenecks, so we can make meaningful progress toward the goal of delivering 1.5 million new homes.”
RICS survey results continue to highlight the pressures on renters, with demand consistently outstripping supply. While the Renter’s Rights Bill aims to improve standards and offer better protections for tenants, we must ensure that these reforms do not discourage responsible landlords from remaining in the market. Most importantly, the planned changes in the private rental sector fall short of tackling the core issue: increasing supply and making housing more affordable for tenants.”
Renters’ Rights Bill will fuel a rise in tenancy disputes
The number of tenancy disputes in the UK has reached its second-highest level in a decade, research reveals.
Inventory Base says it has analysed historical data from the Tenancy Deposit Scheme (TDS) and found that disputes have been steadily increasing, with a big jump last year. The property inventory specialists say that in 2023, the number of annual disputes rose to 42,180, up from 27,035 in 2013.
That’s a 56% increase over the past decade.
While there were temporary declines in 2021 and 2022 due to pandemic-related eviction bans, the number of disputes surged by 20.5% in 2023. TDS predicts that disputes will continue to rise, reaching 42,542 by the end of 2024 and 44,040 by the end of 2025 – the highest annual total since 2014.
Important to implement flawless practices
Siân Hemming-Metcalfe, the operations director at Inventory Base, said “the number of disputes we’re seeing, and the rate at which they’re increasing, goes to show just how important it is for landlords and letting agents to implement flawless practices in deposit protection and inventories. It’s forecast that disputes are set to rise, and the likelihood is that the proposed Renters’ Rights Bill will only lead to a higher number of disputes as both tenant and landlord adjust to the new laws put into place.”
What’s more, the government is seemingly intent on pushing through a ban on Section 21 evictions before a reform of the county system has been completed. The courts are already struggling with the sheer volume of cases at present and so for those disputes that do require court proceedings in order to be resolved, the time taken to do so is likely to increase considerably.”
Tenants benefitted from protection measures
The firm says that over the past decade, there have only been two years in which the number of tenancy disputes has fallen.
That was in 2021 and 2022 which saw recorded drops of -5.3% and -13.6% respectively.
However, this is when tenants benefitted from protection measures, including eviction bans, that were introduced during the COVID-19 pandemic and once these protections were removed, 2023 saw an enormous increase of +20.5% in a single year in the number of disputes recorded.