It’s claimed that as many as one in five tenants has lost out in a rental bidding war during the last two years, with tenants in London, Southampton and Brighton the worst affected.
That’s the claim from David Hannah, chairman of Cornerstone Tax, who says the national average shows that in the past two years 17 per cent of tenants UK-wide have lost out in bidding wars.
But the figures go far higher in some markets – 20 per cent in Manchester, 26 per cent in London, 27 per cent in Brighton, and 28 per cent at Southampton.
Controversially, Hannah asserts that the Renters Reform Bill, including the proposed abolition of Section 21 eviction powers, provides “a positive step in the right direction” but falls short of the long-term solutions needed to make the market attractive for landlords and tenants alike.
According to Cornerstone, 15 per cent of landlords are considering selling up due to the rising costs associated with their property, with the average landlord losing £7,500 amid sky-high mortgage rates and unfavourable tax changes.
“The exodus of landlords across the country has been a direct contributor to the current supply and demand imbalance, perpetuating a vicious cycle where tenants across the country continuously lose out” according to Hannah.
He continues: “Our data highlights a clear issue in the UK’s rental market, many of these landlords took out mortgages on buy-to-let schemes during a period of sustained low interest rates; fast forward to 2023 and the pressure currently facing landlords is simply too much. Spiralling interest rates and the highest tax burden since the second world war have forced thousands of landlords to sell up, which then puts further pressure on renters due to a lack of stock.
“It’s unfortunate that many renters from across the country now feel the need to jump through multiple, previously unnecessary hoops to secure a rental property – the Government’s proposed Renter’s Reform Bill would undoubtedly relieve the stress of many tenants, but I’d argue that policymakers ought to be assessing the root causes of the current rental market turmoil.
“Last week’s major headline was that the rate of inflation had fallen dramatically to 4.7 per centr, that should have been the signal for the Bank of England to begin looking at cutting the interest rate in order to inject short-to-medium term optimism into the UK housing market. Despite this, interest rates remain at 5.25 per cent and will continue to do so until the BoE’s next major decision.
“Whilst it’s positive to see many of the UK’s major mortgage lenders slashing their rates, with Halifax now offering five-year fixed rates at 4.53%, the dream of home ownership remains a pipe dream for many. What’s needed going into 2024 is a commitment from the BoE to prioritise first-time buyers by signalling further cuts to the interest rate.”