How Section 24 caused rental chaos
We’ve been running flatshare sites since 1999 and we’ve NEVER seen the rental market like it is today. There are more people looking for rooms than ever before, fewer rooms available than at any time since 2012 and record high rents as a result.
Here’s what that looks like:
Shocking isn’t it? But how did we end up here and, more importantly, how can it be fixed quickly?
The demand bit is pretty simple. Covid created a huge backlog, where people couldn’t move (or didn’t want to). So everyone’s in the market at the same time. But why are there no rooms? The main reason is that landlords are quitting.
Around five years ago, the government brought in new legislation (including Section 24 and a 3% stamp duty surcharge), which increased landlords’ costs and drove rents up as a result. You can see a clear decline (in the graph above) in the number of rooms available from the time the changes came into force around five years ago.
When we recently polled landlords, a third told us they were reducing the number of properties they have this year and 16% said they were quitting altogether. 94% said they have no confidence in the government's approach to renting. Section 24, far from sorting out the rental market, seems to have made a bad situation worse.
There’s no real knowing what the government will do next (or if they’ll stick with their plans once they’ve announced them). What is clear, though (with 95% of tenants having no confidence in government either), is that the market isn’t currently working for anyone.
Image credit - Benjamin Elliott