UK facing severe housing shortage

There is not enough rental property to meet consumer demand in the UK - and the situation is worsening, according to Q1 research from the Association of Residential Lettings Agents (ARLA).

Insufficient supply of good quality property means that the private rented sector (PRS) is struggling to meet demand.  With the PRS picking up the slack from the housing market, ARLA believes that the next Government must focus on averting the sector from crisis.

"More than two thirds of our agents have seen demand outstrip supply across the country - there simply isn't enough housing stock coming onto the rental market.  The Government's move to help first-time buyers by raising the Stamp Duty threshold was a step in the right direction.  Now we need to see tangible measures to support the PRS," said Ian Potter, operations manager of ARLA.

"Investors need to be treated as businesses, with proper incentivisation to invest in and refurbish older properties.  This will improve standards, help the environment with improving insulation, and encourage much-needed investment to help get the market back on its feet.

"Banks need to be told to be more flexible about the provision of finance for the Buy-to-Let sector which has fuelled the supply of good quality homes, and saved this government from an even greater housing shortage.  Without these kinds of measures there is a serious risk that a shortage or rentals will create another form of housing crisis."

The research, conducted among UK letting agents and landlords, shows that during Q1 2010, two thirds (59%) of ARLA member agents reported more tenants than properties available.  This is a 50% rise on the last quarter (41%) and in Q3 2009 the figure was just 24%.

The speed with which tenants are snapping up homes to rent is also telling - properties are vacant for an average period of just 3.6 weeks, which is down from 4.2 weeks at the same point last year.

Regional perspectives

London

Lucy Morton MARLA, Managing Partner - W.A. Ellis LLP:

"The lack of stock is almost at crisis point in central London.  In a year, it has dropped by about 60%.  The upside to this is obviously that rents are rising dramatically and, in some cases, are back to pre-credit crunch levels."

North West - Greater Manchester

Robert Jordan FRICS, FARLA Hon. Chairman, Jordan's:

"There is a real shortage of good quality property coming on to the market.  Tenants are staying much longer in their rented property so the traditional ‘churn' in the market has all but dried up. Governments seem not to understand that the PRS is a very important element in the housing supply chain.  There is far too much legislation which puts off new landlords entering the market. They need incentives which will help the one million homeless in this country find a decent home to live in."

Scotland - Edinburgh and Glasgow

Fiona Docherty, Managing Director, Ryden Lettings:

"The position in Edinburgh and Glasgow mirrors that of the UK as a whole with far more tenants than suitable properties.  Properties which remain in greatest demand are one and two-bedroomed properties towards the lower end of the market.  This underlines the difficulties people are having in being able to buy particularly at the first-time buyer end of the market.

"Additionally, landlords are taking their properties from the rental market and placing on the sales market buoyed by reported improvements, whether these translate into sales only time will tell.  In the meantime, people need somewhere to stay."