Rental sector can't meet demand for homes to let
As lockdown is eased, demand is currently outpacing supply, but London is seeing rents fall.
The rental sector is taking off again as lockdown restrictions are eased. But for renters, it's very much a game of two halves. As we blogged yesterday, around 2.6 million renters are estimated to be in rent debt or likely to find themselves in arrears as a result of the pandemic. And landlords are feeling the financial fallout too. So unless they are able to come to suitable payment arrangements with their tenants, there could be a flood of evictions when the government lifts the repossession ban - currently scheduled for 25 June unless steps are taken to extend the embargo.
Bad news for tenants in financial hardship but good news for those whose jobs have been unaffected by the pandemic and are now wanting to move, giving them more choice as those properties come back onto the market later in the year.
In London, property agent Chestertons explains that the outlook for landlords is being impacted by the fact that fewer people are willing or able to move to the capital due to the pandemic. The agency told Letting Agent Today that rents in London have dropped by between 10% and 15% as a result. Fewer students, fewer corporate rentals and tenants worried about their income are all making the situation worse, as is the trend for renters to try and negotiate lower rents with landlords, says Chestertons.
In the rest of the country, the story is a more positive one. According to Rightmove, demand for lettings is up by 22% compared to last year, with the online property specialist telling the BBC that the easing of lockdown has released "two months of pent-up tension".
Lockdown break-ups, forced moves and the wish to relocate away from cities is driving the market, and the pandemic has left many people with “an immediate housing need” according to Rightmove. At the same time, buy-to-let landlords are exiting the market due to worries about finding financially sound tenants, while those that continue to let property are likely to be hand-picking the tenants with the best references and credit records. All this adds up to high demand for fewer rental homes. So we can expect to see rents rising and more people struggling to find an affordable home - unless we see that potential spate of evictions bringing many more rental properties onto the market.
The market is in an interesting place and, with coronavirus likely to be with us for some time to come, it's hard to predict what the rest of the year will bring for landlords and tenants. What do you think?
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Author : Mary-Anne Bowring
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