Rent Hikes for Tenants Due to Supply Demand Imbalance

Tenants could see further rent hikes as new data from the Residential Landlords Association (RLA) reveals that nearly one in four landlords plan to sell up buy to let properties over the next year.

According to the RLA, the supply of homes available to rent is set to fall as demand for rental properties starts to rise. 22 per cent of landlords will allegedly plan to sell at least one of their properties over the coming year, with a mere 18 per cent expecting to buy additional properties to rent.

The RLA interviewed nearly 3,000 landlords as part of their survey. Of this group questioned, 33 per cent have seen a rise in demand for their rental properties over the past three years. This has led to a supply and demand imbalance, something that is likely to lead to rent hikes. 47 per cent of landlords expect to raise rents over the coming year.

A further reason for growing rents could be changes to mortgage interest relief, which will lead to landlords being taxed on their turnover as opposed to their profit. This is likely to cut their profit margins, and will necessitate a rise in rents to offset this in order to keep their buy to let portfolios profitable. 

RLA Chairman, Alan Ward, commented on the survey’s findings: ‘As demand continues to increase for homes to rent, punitive tax changes are discouraging investment by the majority of good landlords who want to provide accommodation. Whilst efforts by the Government to support institutional investment in the sector are welcome, this will remain a drop in the ocean. To meet demand, we need pro-growth taxation that actively supports and encourages the majority of landlords who are individuals providing good housing, to invest in the new homes to rent we so desperately need.’