Recent analysis reveals a contraction in the private rented sector (PRS) supply, contradicting government claims of expansion. Despite official statements highlighting growth, data shows a significant fall in rental property availability, particularly in London.

Declining Rental Supply in London

Research conducted by Savills for The Telegraph indicates that the number of homes available to rent in London has decreased by 21.7% compared with two years ago. At the same time, the number of properties advertised for sale in the capital has risen by 17.6%, signalling a notable shift in the market.

This trend is particularly marked in the flat sector, which typically contains a higher proportion of buy-to-let properties. Here, sales listings have surged by 30.9%, while rental stock has diminished sharply.

National Trends Mirror London’s Market

The pattern observed in London is reflected across the UK, with the supply of homes to rent falling by 17% over the past two years. Conversely, the number of homes for sale has increased by 10% nationally. This suggests a broader market movement away from rental properties towards sales.

Government Position and the Renters’ Rights Act

Despite these figures, the government maintains that the private rented sector has doubled in size since the early 2000s. It argues that the recently implemented Renters’ Rights Act will support tenants by providing greater security and stronger rights, including enhanced powers to challenge rent increases above market rates.

A Ministry of Housing, Communities and Local Government spokesperson told The Telegraph: “The private rented sector has doubled in size since the early 2000s and our landmark Renters’ Rights Act will give millions of tenants the security and stronger rights they need and deserve, including stronger powers to challenge above-market rent increases.”

The government also emphasised efforts to increase capacity in the legal system, with plans to recruit up to 1,000 judges and tribunal members across all courts and tribunals this year.

Impact on Landlords

Despite the protections introduced by the Renters’ Rights Act, Savills anticipates that the legislation may encourage more landlords to exit the market over time. Lucian Cook, head of residential research at Savills, commented: “Clearly, we will see a few more landlords leave the sector in the coming months, but we should be at or around the peak.”

This potential reduction in landlord participation could further tighten rental supply, exacerbating the current decline in available rental properties.

What this means for landlords

The shrinking supply of rental properties, particularly in key markets such as London, presents challenges for landlords navigating an evolving sector. The introduction of the Renters’ Rights Act, while aimed at strengthening tenant protections, may also influence landlord decisions regarding continued investment in the private rented sector.

Landlords should be aware of the increasing legal support for tenants and the government’s commitment to expanding tribunal capacity, which may affect dispute resolution processes. Understanding these changes is crucial for managing rental portfolios effectively in a market experiencing both regulatory shifts and supply pressures.

Source: Based on reporting from Property118

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