The latest Goodlord & Vouch State of the Lettings Industry Report – the 7th annual report from the rental tech platforms – shows a sector facing tough challenges. This year, insights have been drawn from over 1,500 letting agents, landlords and tenants.
The results revel that landlords are continuing to leave the Private Rented Sector (PRS) and shrinking supply is causing rents to soar, with almost half of tenants surveyed now considering themselves to be in “rent poverty”. In the middle, letting agents are busier than ever. Whilst demand is at an all time high for lettings businesses, stress levels amongst agents are rising and market sentiment has slipped to an all-time low.
A huge percentage of landlords – just under a third of those surveyed (30%) – said they had either sold one of their rental properties or put one on the market in the past year. A further 17.4% of landlords said they were considering reducing their portfolio in the coming year.
This means almost half of all landlords have already sold off some PRS stock or are planning to do so over the next year.
More than half (58%) of letting agents reported a decrease in the number of available properties – with 37.4% noting a “significant” decrease.
When asked what was driving their desire to leave the market or reduce the size of their portfolio, more than half of landlords (56%) planning to downsize or exit the market said incoming legislation – such as the Renters’ Rights Bill, in particular the abolition of Section 21 – was the primary reason.
Letting agents agree – two-thirds (66%) believe the new Bill will ultimately lead to fewer rental properties being available.
Over half of landlords (52%) also said new rules around energy efficiency standards would be a reason for leaving the sector.
Almost a fifth of landlords whose properties don’t meet the minimum threshold said they aren’t prepared to invest anything in upgrading their properties.
Rising mortgage rates, increased arrears, and tax changes are also driving landlords to sell up.
This year’s survey also highlighted the intensifying pressures being felt by tenants as they compete for properties in a market where demand continues to outstrip supply.
More than three-quarters of agents said they’d seen an increase in the number of tenants searching for properties. Almost half of agents (49.1%) described that increase as “significant”.
However, despite fierce competition for properties, overbidding doesn’t appear to be a common practice. Only 12.5% of tenants reported paying more rent for their property than the amount for which it was advertised, with 82% paying the advertised price.
Rents have continued to surge in 2024, with the average monthly rent in England hitting £1,470 per month in July – the highest average ever recorded by Goodlord’s Rental Index.
Only a fifth (18.5%) of landlords said they haven’t increased the rent on any of their properties over the past year.
Almost half of tenants surveyed (48%) said they are now spending more than 40% of their income on rent. According to industry metrics, this would classify these tenants as being in ‘rent poverty’.
21% of tenants believe they’re “very unlikely” to purchase a property in the next five years, and a further 13% think they’re “somewhat unlikely” to purchase one – signalling demand for rental properties won’t be slowing down any time soon.
With huge demand from tenants and a brisk market environment delivering returns, agents are busier than ever. Whilst over half of agents feel in control of their workload, 42% say they simply do not have enough time to manage their workload.
Alongside this, 33% of letting agents cite stress as a significant issue, and 19% report struggling with mental health challenges.
Amongst agents, sentiment is at the lowest level ever recorded by this survey, with 54% feeling pessimistic about the PRS.
To stay afloat during these choppy times, letting agents say they are prioritising attracting new landlords, securing property stock, and ensuring compliance to stay ahead of the competition.
William Reeve, CEO of Goodlord, commented: “This year’s report doesn’t give us a lot to be cheerful about. The whole sector is under intense pressure and the light at the end of the tunnel remains fairly dim. Overall, the country needs more rental homes to alleviate the supply/demand imbalance – which in turn requires house building, streamlined regulations, and better landlord incentives. While letting agents themselves will generally continue to be resilient – as they have so consistently demonstrated in recent years – neither landlords nor tenants have much to be optimistic about right now.”
Tom Goodman, managing director of Vouch, added: “The stark takeaway of this report is how intertwined the fates of the PRS stakeholders are. Landlord pressure is felt directly by tenants and vice versa. Against the backdrop of these rising challenges, agents are handling a more complex workload but also navigating booming demand from tenants.
“We need to start considering the bigger, more interconnected picture when it comes to regulation and reform. We need the next chapter of the PRS to be one which benefits all. The focus must be creating a foundation on which everyone can thrive.”
Download the full report here.