Against the backdrop of a cost-of-living crisis, the private-rented sector (PRS) is experiencing a crisis of its own; one of supply, according to a new report by the National Residential Landlords Association (NRLA).

NRLA polling over recent years has indicated that landlords are less willing to invest in new properties and are increasingly uncertain about their future prospects as providers of housing. This is leading them to report that they are selling properties at a faster rate than they are purchasing new additions.

There are myriad factors why this is likely to be the case, but should this trend continue, we are unlikely to see an improvement to the lack of supply relative to demand in the PRS.

In December 2022, the NRLA commissioned independent economics consultancy Capital Economics to look at the factors which may influence landlords’ decisions to invest and model the impact of changing fiscal and monetary policy on the supply of PRS properties.

During the first 15 years of the 21st century, the number of households either renting or owning their home increased by approximately 12%, an increase of around 2.45m.
Over the same period the size of the social rented sector (SRS) decreased by around 35,000 households and the number of households owning their own home shrank by 9,000. Therefore, practically all net new households created during this period found a home in the private rented sector (PRS). This is to be expected given the barriers to home ownership and the contrast between the relative lack of investment in new social housing and the encouragement afforded private investors looking for alternatives to faltering pension pots.