England, Wales, Scotland & Northern Ireland
Residential Market
Thousands of families forced into smaller dwellings as rental supply crisis continues
New data from Cornerstone Tax reveals that one-in-five landlords are considering selling up due to rising costs associated with their property
David Hannah, Group Chairman of Cornerstone Tax, discusses the urgent need for further government support in the wake of a ‘lacklustre’ Autumn Statement
As rental prices continue to skyrocket across the country, tenants are having to sacrifice comfort in an effort to remain within their budgets. Research from Dataloft found that thousands more families are now renting smaller homes than they were three years ago. In the first half of 2020, 57% of new tenancies signed by families on £30,000 to £70,000 a year were for homes with at least three bedrooms. In the same period of 2023, that figure had fallen to less than 51%.
Dataloft’s Managing Director argues that this reduction in renters’ living standards is a direct result of severe supply constraints that have driven up rents. In light of this, new data from Cornerstone Tax, the UK’s leading property tax consultancy, has found that almost one-in-five landlords are considering selling up due to rising costs associated with their property. These figures illustrate a stark divide between the north and south of the country, with a staggering 52% of Brighton landlords considering an exit from the market, compared to 26% and 22% in Leeds and Manchester respectively.
Property Reporter
Key Stats:
% of landlords considering selling up due to rising costs associated with their property:
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Brighton – 52%
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Birmingham – 33%
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London – 37%
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Leeds – 26%
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Manchester – 22%
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National Average – 17%
According to the Group Chairman of Cornerstone Tax, David Hannah, record mortgage rates combined with the highest tax burden since the second world war have pushed many buy-to-let landlords out of the market, reinforcing a supply crisis that continues to squeeze budgets of tenants. Despite last week’s Autumn Statement offering some relief to landlords by way of the unfreezing of the local housing allowance (LHA), Hannah argues that the roots of the current crisis remain largely unaddressed.
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.
"We are generally seeing an exodus of landlords from the capital and South East, looking towards the North East of England instead. It's a region that's seen the highest growth in property prices in the last twelve months, with many seeing it as a much safer investment than the capital."
"The current strain could have been eased in last week’s Autumn Statement by way of removing the second home surcharge from bona fide private rental sector investors and giving them a reduction in their acquisition costs as well as, reinstating full relief for mortgage interest payments in common with other businesses that have to borrow money to provide their services.
"This double measure would have both reduced the costs of purchase, whilst allowing landlords to freeze, or even potentially cut, rents which have had to have both these penal measures “costed in” over the last few years. It would also stimulate purchases in the market at a time when owner occupiers are unable to purchase because of affordability issues.
David Hannah, Group Chairman
