The seventh annual Goodlord and Vouch State of the Lettings Industry Report, showed that landlords are continuing to leave the private rented sector (PRS).
With insights drawn from more than 1,500 letting agents, landlords and tenants, the report found that shrinking supply was causing higher rents, with almost half of tenants surveyed now considering themselves to be in “rent poverty.”
While demand was found to be at an all time high for lettings businesses, stress levels among agents were rising and market sentiment slipped to an all-time low.
Three in 10 (30%) of landlords had either sold one of their rental properties or put one on the market in the past year.
A further 17.4% of landlords were considering reducing their portfolios in the coming year.
This means almost half of all landlords had already sold off some PRS stock or were 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 agreed, as two-thirds (66%) believed that the new Bill would lead to fewer rental properties being available.
More than 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 did not meet the minimum threshold said they were not prepared to invest anything in upgrading their properties.
The 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 had seen an increase in the number of tenants searching for properties – almost half of agents (49.1%) described that increase as ‘significant’.
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 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 had not increased the rent on any of their properties over the past year.
Almost half of tenants (48%) said they were 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 believed that they were ‘very unlikely’ to purchase a property in the next five years, and a further 13% said they are ‘somewhat unlikely’ to purchase one.
William Reeve, CEO of Goodlord, said: “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.”
