“What is really happening in the Lancaster Rental Market” It is a question we are asked often, hence today’s article.
The private rented sector for both Lancaster landlords and Lancaster tenants is facing immense challenges, with a shortage of available homes for rent putting renters under significant pressure.
And you can see why when the average UK rent in 2021 was £1,381 and in 2023 it has been £1,706, an increase of 23.53%. This problem is UK-wide.
Let’s look closer to home in the Lancaster area.
Average New Rents
The average rent for homes coming on the market in the Lancaster area (LA1 and LA2) in 2021 was £731 per month, whilst in 2023, it has been £805 per month. You can see why people are accusing landlords of “widespread profiteering”. Today we want to ask, are they really?
This increase in average Lancaster rent is for new tenancies, not tenancy renewals.
A new tenancy is when a brand-new tenant moves into a home, whilst a renewal is when an existing tenant renews the lease with their existing landlord.
Government data shows that most landlords are not exploiting the mortgage crisis, with 64% of landlords maintaining and 4% decreasing rents to shield renters from the impact of renewal of their tenancy agreement, dispelling the notion that they are exploiting the situation.
Looking at the same Government data, of the landlords setting rents for new tenants, just under half of landlords (45%) stated they increased the rent compared to the previous tenancy with the old tenant, whereas a third (35%) kept the rent they charged at the same level, and surprisingly 1 in 12 (8%) decreased the rent.
Therefore, whilst the average percentage growth in Lancaster for new tenancies is 10.1%, the overall average for all tenancies is only 4.9% for Lancaster.
And 4.9% is much lower than the rate of inflation.
Landlords Profit Margins
Contrary to popular belief, landlords’ profit margins have significantly dwindled in recent years. The profits for private landlords are at their lowest since the Credit Crunch due to rising mortgage rates and limited tax relief. This demonstrates that private landlords are not profiteering during the cost-of-living crisis.
Now some of you will say, Lancaster house prices have risen in that time. Yes, that is the case, yet not by the rate of inflation, so in fact in ‘real’ terms, their investments have gone down in value.
Landlords are often portrayed negatively in the media but are in fact making considerable efforts to provide safe and secure housing for millions of tenants.
Landlords face growing costs, including increased mortgage payments and the negative impact of a tax system that discourages investment in the rental market. These challenges are further exacerbated by ongoing uncertainty surrounding reforms to the law regarding landlords.
Landlords Options
With limited options available, landlords must choose between leaving the private rented sector, increasing rents as a last resort, or absorbing mounting costs. However, the latter is nearly impossible for most individual landlords who lack deep pockets. To address these challenges, the Government must provide crucial support to the rental market.
Thoughts
To alleviate the burden on renters, the Government should reconsider current taxes which are designed to discourage landlords from providing more rental homes. It is vital to ensure that the supply of rental properties does not further diminish, as Lancaster tenants simply cannot bear the consequences of a dwindling market and it will lead to further housing hardship.
Without proper government support, both renters and landlords will continue to face challenges, caught between a rock and a hard place.
Housing is such an important thing (rather like the NHS), and I would urge all parties, to move beyond rhetoric and take positive action to support the private rented sector.
I know many Lancaster landlords who are making sincere efforts to shield Lancaster renters from the mortgage crisis, and it is crucial their contributions are recognised.
By fostering an environment that encourages investment and provides support to renters, the Government can help alleviate the strain on both landlords and tenants and ensure a sustainable and fair rental market for all.
These are our thoughts, what are yours? Can you think of a solution that supports and helps everyone? We are genuinely concerned this is going to get worse before it gets better….
Thanks for reading
Josh
