22 Sep What Is the Future for the Rental Market?

Of course. There will always be those who need to Rent and those who want to Let, however, who is renting and who will be able to rent could look different and it will matter who shapes the changes.

The private rented sector is now a central part of housing in England and Wales and the choices we make in policy and practice will shape whether that future is fair or stacked against people who need to rent.

How big is the private rented sector? And why that matters

The English Housing Survey shows that in 2021–22 about 4.6 million households were private renters, roughly 19 per cent of all households. More recently the sector grew to around 4.7 million households in 2023–24, up 52 per cent from about 3.1 million in 2008–09. Put simply, private renting is no longer niche. It is the second largest housing tenure in England. That scale means any policy or market shift affects millions of households and has knock on effects for first time buyers and local communities.

Why are landlords selling up?

There is not one answer, but a few of the main reasons are taxation, rising running costs, compliance headaches and lower net returns. Changes to mortgage interest tax relief, tightened energy efficiency standards and higher mortgage rates have squeezed yields.

At the same time landlords face more paperwork and new compliance obligations which push up the time and cost of letting. For smaller, part time Landlords the economies often stop working and selling becomes the inevitable choice.

There is a second issue. If a sizeable number sell at the same time institutional money keeps buying, ownership becomes concentrated. That can push rents up and reduce the daylight for local alternatives.

We want to avoid monopolies in the renting industry to keep prices fair and competitive for those looking to rent whilst still profitable for those looking to rent out their properties.

How easy is it to rent out your house?

Listing a property is relatively straightforward. In practice proper letting means Tenant checks, gas and electrical safety, energy performance checks and certificates, deposits handled correctly and a record of repairs and maintenance. That all takes time and money.

For ‘Buy to Let’ Landlords, there has to be a reasonable return after tax, mortgage costs and compliance.

If the goal is to keep good landlords in the market the obvious answer is to simplify the compliance process where it is unnecessarily complex and to target enforcement on the bad actors rather than applying blanket rules that drive out responsible landlords.

Build to Rent and the shift in who owns homes

Developers and institutional investors have expanded Build to Rent. These purpose-built rental blocks are professionally managed and offer consistent standards, but they usually come with higher rents and management charges and often with limited outside space.

These will suit some renters such as professionals in city centres, but they are not a universal solution. If smaller landlords leave the market, more households will face centralised rent setting and higher living costs.

Another development in converting commercial blocks to residential. However, that has slowed as office working patterns are starting to revert. The profile of those homes tends to be apartments with limited, or no outdoor space and with service charges, on top of rents.

Final point

The rental market will endure. The question is whether it stays diverse and local, or becomes concentrated and Corporate. Cutting unnecessary red tape and targeting enforcement sensibly is the closest thing to a win-win. If policy is punitive and unfunded many small landlords will sell out and the market will tilt towards larger, professional landlords who set rents to meet profit targets.