Nikka Sulton

The UK rental market continues to face a shortage of available homes, with some landlords reducing their portfolios or leaving the sector altogether.

The latest market snapshot from the Royal Institution of Chartered Surveyors (RICS) highlights continued concerns about the availability of good-quality rental properties, with taxation, regulation and affordability all influencing decisions across the private rented sector.

Rental Demand Remains Weak

The RICS survey tracks sentiment among its members, with the latest figures showing that tenant demand was broadly flat in the three months to July.

The tenant demand net balance fell to -1%, compared with +12% in the previous survey. This suggests that demand is no longer showing the stronger levels seen earlier in the year.

However, the more significant concern remains the supply of rental homes.

Landlord instructions remained firmly negative at -27%, with feedback from RICS members indicating that some landlords are continuing to reduce their portfolios or leave the rental market altogether.

Landlord Numbers Continue to Affect Supply

The lack of new landlord instructions suggests that fewer properties are coming onto the rental market. This is particularly important for tenants because a smaller pool of available homes can make it harder to find suitable accommodation.

RICS members have repeatedly highlighted the shortage of good-quality rental stock across different parts of the country. They also point to the combined effects of taxation, regulation and affordability as factors influencing the behaviour of both landlords and tenants.

For landlords, rising costs and additional regulatory requirements can make some properties less attractive as long-term investments. Some may therefore decide to sell, while others could reduce the size of their portfolios rather than take on additional properties.

Rents Expected to Keep Rising

Despite tenant demand remaining relatively subdued, expectations for rental growth remain positive.

A net balance of +28% of RICS respondents expect rents to increase over the next three months. This is higher than the +25% recorded in the previous survey.

The combination of limited supply and continued expectations for higher rents highlights the pressure facing renters. When fewer properties are available, landlords can have greater scope to increase asking rents, particularly in areas where demand remains strong.

For tenants, this can create a difficult market where suitable properties are limited while rental costs continue to rise.

Regulation Remains a Key Concern

RICS members continue to point to recent regulatory changes as an important factor affecting the rental market.

RICS Chief Economist Simon Rubinsohn said feedback from members continues to highlight the impact of the latest round of regulation, with the decline in new landlord instructions indicating further pressure on supply.

The comments come as landlords face a changing regulatory environment, with reforms to the private rented sector increasing the responsibilities placed on property owners.

While stronger regulation is intended to improve standards and provide greater security for tenants, landlords may also consider whether the additional costs and obligations still make property investment financially viable.

What Could Happen Next?

The latest RICS figures suggest that the supply of rental homes remains one of the main challenges facing the UK housing market.

If landlord instructions continue to remain below normal levels, the shortage of available properties could persist. This could put further pressure on rents and make it more difficult for tenants to secure suitable homes.

At the same time, policymakers face the challenge of balancing stronger protections for renters with the need to maintain a healthy supply of privately rented properties.

For landlords, the figures highlight the importance of keeping a close eye on costs, regulation and rental demand when deciding whether to hold, sell or expand a property portfolio.

The government says the Renters’ Rights Act strengthens protections against discrimination in the private rented sector.

Housing Minister Matthew Pennycook said the legislation targets both obvious and indirect discrimination during the lettings process.

New Protections

The Act makes it unlawful for landlords and letting agents to discriminate against prospective tenants because they receive benefits or have children. Breaches can result in fines of up to £7,000.

Labour MP Tanmanjeet Singh Dhesi asked whether landlords and letting agents should explain why applications are rejected, helping ensure compliance with the Equality Act 2010 and the Renters’ Rights Act.

Pennycook said the legislation extends existing Equality Act protections to people receiving benefits and families with children.

Local authorities will also have stronger powers to investigate and act against discriminatory practices.

The rules cover obvious practices such as “No DSS” adverts as well as less direct methods of preventing applicants from securing a tenancy.

Higher Standards for Landlords and Agents

The government also wants higher standards across the property sector. The Property Ombudsman already has a mandatory code for its letting agent members.

Later this year, a non-statutory code setting out minimum standards for property agents is due to be published, with legislation to make compliance compulsory also under consideration.

The planned Private Rented Sector Ombudsman will also be able to issue landlord guidance and codes of practice.

The government has previously suggested that the PRS Ombudsman could consider a landlord’s previous conduct when handling complaints.

What It Means for Landlords

Landlords and letting agents will need to take greater care when advertising properties, assessing applicants and making tenancy decisions.

Letting practices should be fair, consistent and compliant with the latest legislation, as discriminatory practices could lead to financial and reputational consequences.

The wider aim is to create a rental market where tenants are treated fairly and landlords and agents have clearer standards to follow.