One of Britain’s top lettings professionals has blasted politicians for discouraging investment in the private rented sector.
Dorian Gonsalves, chief executive of estate and lettings giant Belvoir, said that the government’s “flawed policies” like the stamp duty surcharge and the removal of mortgage interest tax relief have driven up costs for landlords, who have in turn increased rents and chosen not to expand their portfolios. According to Gonsalves, these regulations are “100% responsible” for the latest rent rises.
Fierce competition for scarce properties is pushing private rents to record highs. Zoopla’s latest Rental Market Report revealed the biggest rent rises since 2008, with new lets reaching an average of £969 per month.
But despite record rents and rapid capital growth, new investors aren’t entering the traditional buy-to-let market. The latest English Housing Survey found that the number of households living in the private rented sector has fallen since 2017. Landlords are looking to less regulated and higher-yielding investments instead, in particular the booming holiday rental market.
The gap between supply and demand is set to grow even bigger. Analysis by Capital Economics published this month estimates that 227,000 new privately rented homes will be needed each year just to keep up with rising demand – almost as many as were built in total in England in 2019/20 before the COVID-19 pandemic disrupted housebuilding. Gonsalves predicts that average rents will rise by 8-10% this year, and unless more properties come to market quickly, that trend could continue in years to come.
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