England, Wales, Scotland & Northern Ireland
Residential Market
Chaos in the rental market as landlords demand “Tenant CVs"
Tenants are increasingly at the whim of rogue landlords as one- in-five renters admit to having lost in a bidding war over the last two years
David Hannah, Group Chairman of Cornerstone Tax, discusses the current state of the nation’s rental market and what can be done to encourage young people to get on the property ladder
According to a survey from Rightmove, the average rental property now attracts 25 inquiries to letting agents, this is more than triple the 8 that they were receiving prior to the pandemic. As a means of dealing with the sky-rocketing demand within the rental sector, landlords from across the country have begun to place insurmountable pressure on prospective tenants, with UK renters offering a year’s rent upfront and tenant CVs to try and secure a home. Exclusive data from Cornerstone Tax, the UK’s leading group of property tax experts, has found that 1-in-five tenants have admitted to having lost in a bidding war over the last two years, with regional disparities exacerbated primarily in London, Southampton and Brighton. Cornerstone Tax’s Chairman, David Hannah, discusses the current state of the nation’s rental market and the measures that should be taken to encourage young people to get on the property ladder.
David Hannah asserts that the flurry of legislative attention surrounding the rental market, including the proposed abolition of no-fault evictions, provides a positive step in the right direction but falls short of the long-term solutions needed to make the UK’s property market attractive for both landlords and tenants alike. According to Cornerstone, 15% of landlords are considering selling up due to the rising costs associated with their property, with the average landlord losing £7500 amid sky-high mortgage rates and unfavourable tax burdens. 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.
Adobe
Key Stats:
In the past two years, I have lost out on a property due to a bidding war:
National average – 17%
London – 26%
Brighton – 27%
Southampton – 28%
Manchester – 20%
Despite the current spate of chaos in the rental market, hope may be on the horizon for prospective first-time buyers. Asking prices fell to their lowest November level in five years, with the average asking price for a UK home decreasing by 1.7%. Moreover, following the BoE’s decision to continue to hold interest rates at 5.25% a majority of the UK’s biggest mortgage lenders have responded to the stable market signals by slashing their rates, with Halifax reducing their five-year fixed to 4.53% last week.
David Hannah, Group Chairman of Cornerstone Tax, comments:
"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%, 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% 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.”
David Hannah, Group Chairman
