UK Rental Crisis: A Perfect Storm for Landlords and Renters

Rising rents, departing landlords, and a housing shortfall of 4.3 million homes—these are the headlines dominating the UK property market. But what’s driving this perfect storm, and what does it mean for expats and international investors?

Why the UK Rental Market Remains a Key Opportunity

Every week, I’m asked, “Is now a good time to buy UK property?” Despite the challenges, we believe it is. Here's why:

1. Landlord Withdrawals Shrinking Supply

The recent RICS (Royal Institute of Chartered Surveyors) survey reports a dramatic reduction in rental properties. Landlord purchases saw a net balance of -29% in the three months ending October, marking the weakest supply since 2021.

Fewer rental properties mean tighter competition for tenants, pushing rents higher.

2. Tenant Demand Stays Strong

Tenant demand remains elevated, with a RICS net balance of 19%, consistent with high levels seen over the past three years. This demand imbalance is expected to drive rents even higher—33% of surveyors project rent increases in the coming quarter.

3. Exacerbating Factors: Stamp Duty and Policy Changes

Recent stamp duty hikes for landlords could force many to sell rather than hold rental properties. According to the Institute for Fiscal Studies (IFS), these policies may push 500,000 landlords out of the market over the next decade, exacerbating the supply crunch.

4. Rent Growth and Affordability Pressures

• Rising Rents: Annual rent growth peaked at 9.2% in March before settling at 8.4% in September.

• Affordability Strains: Rent now consumes 30% of renters' gross income, the highest since 2017.

5. The Broader Housing Shortfall

The UK has a housing shortfall of 4.3 million homes, according to research from the Centre for Cities. Even if the government meets its 300,000 new homes per year target (a feat it has yet to achieve), it would take 50 years to close this gap.

Key Takeaways for Investors

With landlords exiting the market, rents climbing, and housing in short supply, the UK presents a unique buying opportunity. For investors, the conditions favour those who can hold long-term, as demand for quality rental housing shows no signs of slowing.