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Britain’s rental market faces “growing challenges” with rising demand and low supply, according to a closely watched survey that points to more pain for tenants as political parties focus on home ownership in the election campaign.
The Royal Institution of Chartered Surveyors said on Thursday that its measure of tenant demand more than tripled to 35 in May from 10 in April. At the same time, new landlord instructions, which indicate landlords putting properties up for rent, were flat.
The professional body’s monthly survey measures the difference between the percentage of UK surveyors registering rises and falls in rental demand and instruction.
The growing gap between supply and demand for lettings meant “rental prices will continue to rise for the foreseeable future, albeit at a slower pace than previously”, Rics said. “The UK’s lettings market is facing growing challenges, and it will be interesting to see how the political parties address this.”
Official data published last month showed rental prices surged at an annual rate of 8.9 per cent in April, down from an all-time high of 9.2 per cent in the year to March.
The survey comes as both the Conservative and Labour parties have set out measures to help people get on the property ladder if they win power on July 4.
The Tories, which trail Labour by about 20 points in opinion polls, have vowed to abolish stamp duty for first-time buyers on homes worth less than £425,000. Meanwhile, the main opposition party has proposed a government mortgage guarantee scheme dubbed “freedom to buy”.
Justin Young, Rics chief executive, said that while both main parties had “staked their claims as being the party of home ownership, for that to be the case greater attention must be paid to improving conditions for Generation Rent”.
Rents are rising at a fast pace as a result of high demand, with many people avoiding purchasing a house because they are unable to afford mortgage repayments.
The increase in rental costs, which has been most sharply felt in London, has combined with low supply; some landlords have left the market because of increased red tape and higher borrowing costs, which they have in some cases been passing on to tenants.
Jason Coombes, valuer at Cottons Chartered Surveyors in Birmingham, said: “Rental supply isn’t growing, perpetuating the ‘perfect storm’ for rental prices; increased demand, reduced supply and a necessity for landlords to cover their increased costs.”
The survey also showed that new buyer demand turned negative at minus 8 in May, the lowest reading since November 2023, which Rics attributed to a drop in “confidence regarding an imminent cut in interest rates”.
Respondents also reported a fall in the number of sales agreed during May, while Rics’ house price measure plunged to minus 17 from minus 7 in April.