News

Rising rents leave tenants vulnerable

A fundamental power shift has taken place in the relationship between tenant and landlord. In the first half of last year, tenants (unusually) held all the cards. The pendulum has since swung back, and landlords are once again in the ascendant.

One of the victims of the 2008 credit crunch was the reluctant landlord — the homeowner unable to sell in a stagnant market and forced to let his or her home instead, creating a glut of rental properties. By June 2009, rates had consequently fallen by between 5 per cent at the bottom of the market (those paying below £1,000 a month) and 20 per cent at the top (those paying more than £1,500 a week). The only tenants not to benefit from a discount were those paying more than £5,000 a week, and they probably didn’t notice.

Yet as the sales market has improved since mid-2009, reluctant landlords have been merrily selling up, reducing the availability of rental property. Supply has been further reduced by the continued difficulty experienced by professional landlords in obtaining buy-to-let mortgage finance. That lenders are no kinder to would-be buyers, who are also disadvantaged by the recent rise in house prices at a time of unemployment and salary-freezes, means that demand for rental property now outweighs supply. The private rented sector has been growing for nine years and accounts for 14 per cent of the population, or 3.3 million households.