Landlords are warning of a crisis in the private rental market as figures show a sharp drop in new rental properties becoming available.
The latest Residential Market Survey from RICs, published yesterday (December 12), showed surveyors reported a fall in the number of rental properties entering the rental market in November.
The November rating stood at -29 per cent — more than twice the -14 per cent recorded for November 2018.
In the RICs survey a negative net balance means more respondents were seeing a fall in new rental properties than seeing an increase so the lower the number, the worse things are in respect of rental property supply.
As tenant demand continues to increase, RICs predicted this would lead to rent increases of around 2 per cent over the next year and 3 per cent over the next five years.
Concerns have been raised about a dwindling buy-to-let market over the past few years since a series of tax and legislative changes had hit landlords' pockets.
Some landlords have opted for owning property through a limited company to bypass the tax hike.
Meanwhile the Bank of England’s rule changes will mean fewer are able to borrow money to purchase a buy-to-let property than before.
David Smith, policy director for the Residential Landlords Association, said: “If the decline in the supply of new homes to rent continues to fall whilst demand is still rising, this is going to lead to a crisis in some areas as tenants desperately search for somewhere to live.
“This is all the result of increased taxation and other measures over the last three years and the result has been highly predictable as we said it would be.”
Carl Shave, director at Just Mortgage Brokers, said: "Following the onslaught of new legislation in the buy-to-let sector together with the recent tax changes for income and stamp duty, this shortage of supply will come as no great surprise.
"Changes by the government to try and assist the home ownership housing market have sadly been implemented without heed to the wider housing needs of the country."
Alan Lakey, director at Highclere Financial, said clients were often turned away from the idea of buying a buy-to-let property once the true cost was explained to them.
He said: "Once they've considered stamp duty, the solicitor and valuer fees, the tax on the rental income and the capital gains tax when they come to sell, they usually no longer want to go through with it."
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