Renters across central London and North East England ‘face a deepening crisis’, said the National Residential Landlords Association (NRLA), as the squeeze on the supply of rented homes continues.

It found that 90 per cent of private landlords in central London reported rising demand for rented housing in the last quarter of 2022, up from the 74 per cent a year earlier.

More than eight in 10 (82 per cent) of private landlords in the North East also reported rising demand during the same period.

Despite this strong demand, just five per cent of landlords in the North East plan to increase the number of properties they rent out in 2023.

In contrast four in 10 (41 per cent) said they actually planned to cut the number they let.

Likewise, just five per cent of landlords in central London plan to increase the number of properties they rent out this year, but almost a third (30 per cent) said they planned to cut the number they let.

Supply and demand inbalance

The mismatch between the demand for, and supply of rented housing, is partly due to higher borrowing costs and tax hikes on the sector.

The Bank of England forecasts that by the end of this year, monthly mortgage repayments for buy-to-let landlords will rise on average by around £175. It has warned that a fifth of landlords with such a mortgage will face increases of over £300.

The NRLA is calling on the Government to undertake a full review of the impact of tax rises on the sector. This has been supported by the cross-party Levelling Up, Housing and Communities Select Committee, which has concluded that “landlords with small portfolios are currently critical to the provision of private rented accommodation.” It argues that a tax review of this kind should make the sector “more financially attractive to smaller landlords.”

Richard Blanco, London spokesperson for the National Residential Landlords Association, said: “Londoners need more homes for private rent. Without them renters across the capital face a bleak future as they struggle to find anywhere to call home.

“Sadly, this crisis was all too predictable. It has been caused by successive Chancellors’ discouraging investment in the sector through the introduction of ever more punitive tax hikes.

“It is time the Government reversed course and accepted calls by the NRLA, the LUHC Select Committee and others for tax measures which encourage the supply of homes to rent.”