The UK Private Rental Market (PRS) has seen the available letting stock fall by 39% in just three years.     January 2023

The numbers are significant; available letting stock in December 2019 was 328,412 properties and by December 2022 it had fallen to 199,725

The UK Rental market is characterised by private landlords holding between 1 – 5 properties, and they are busy divesting themselves of their properties.  Since 2015, Landlords have had to face mortgage interest relief changes, the scrapping of wear and tear allowances, a stamp duty surcharge of 3% and Capital Gain Tax unchanged at 28% when it was reduced to 18% for other assets.

In Scotland, the Land and Buildings Transaction Tax has higher rates for those buying additional property. Landlords have been further constrained through a rent freeze,  and although this has been temporarily lifted, the increase was capped at just 3% when RPI is in double digits.   Just to add to the mix of woes for a Landlord, Scotland has prevented the enforcement of evictions. In the rest of the UK, there is a considerable delay in getting a Court Order for an eviction due to Court backlogs, and often Judges will not support the property owner anyway.

Landlord bureaucracy continues to increase too;  landlords will have to ensure their properties meet an Energy Performance Certificate (EPC) Level of C or above by April 2025.  The current requirement is Level E. Landlords are worried about material and improvement work costs rising as the deadline approaches.   Hardly a surprise Landlords are getting out of the market.

Politically, the UK Government’s aims are laudable, but there are unintended consequences to their anti-landlord – pro-tenant policies

Their aims are to Improve the housing stock, reduce the impact on the environment and give tenants peace of mind. However, the current policy is impacting affordability and drastically reducing rental property choice.  One industry expert is expecting that the rental market will contract by a further 5% in 2023.  Unsurprisingly, rents are increasing rapidly as demand outstrips supply.  Tenant demand is at an all-time high with rental property portal traffic searches up 142% according to their statistics.

Tenants who remain with the same Landlord for many years tend to pay less rent, especially if they are ‘good’ tenants.  As rents and mortgage costs rise rapidly, many of the tenants who may have moved or purchased are staying put, further reducing supply.

For organisations seeking to relocate employees to the UK, or within it, they are facing increasing housing costs

Those Landlords who are remaining in the PRS are charging high rents to cover their increasing costs and tax liabilities. In September 2022, rents increased by 13% compared to the same period in 2021.   Home Search days will generally have fewer properties available to view and the assignee will need to make a swift decision on their preferred property choice.  Your relocation agent will need to immediately pay a holding deposit to get the chosen property off the market but even that tactic is no guarantee the property will end up with a signed lease.

Housing, household goods removal and Visa costs are the single most expensive elements of a relocation if you exclude salary/tax costs.  Employee Relocation has seen an increase in UK Visa costs, a substantial increase in shipping costs and now a significant rise in housing costs.

It is estimated that the UK Relocation industry contributes £7 billion a year to the UK economy

When the current Prime Minister was the Chancellor of the Exchequer, he told us that he wants to make sure the UK is ‘open for business’ and to make the UK an attractive destination for business and entrepreneurs.

With a Relocation Tax Allowance frozen at 1993 levels and increasing costs for assignees coming to the UK, HCR, the Association of Relocation Professionals and industry leaders are understandably concerned that the UK is not being as competitive as it needs to be to entice the necessary talent to this country.

If you have any comments to this article, please email them to – Adrian.Leach@hcr.co.uk