Demand for rented accommodation is increasing just at the same time as the number of homes for rent is decreasing. On the one hand, social changes are leading more and more young people towards renting rather than committing to a mortgage. Increasing numbers of retired people are also joining the rental market. Research by Scottish Widows suggest that one in eight retired people in the UK will be living in rented accommodation in the next 15 years, trebling the existing number to over 1m.
All this comes at a time when the number of properties for rent is falling. According to residential database specialist Home.co.uk, the supply of rental properties in the year to November 2017 fell by 16 per cent. That shouldn’t come as a surprise considering the National Landlords Association admitted that 20 per cent of its members plan to reduce the number of properties in their portfolio within the next year. There are significant regional variations however. London property prices are keeping yields low, while capital appreciation is patchy. This will discourage new supply at a time when there are signs of increased demand. There will be locations still offering growth potential, notably in areas likely to benefit from the Crossrail line, but if supply slows as demand increases, the inevitable result will be upward pressure on rents.