What will Government policy really mean for Evesham and Pershore landlords?

Last week, I had the opportunity to meet former MP, Cabinet Minister and Deputy Conservative Party leader, Michael Portillo at our annual ARLA Conference in London. As a keynote speaker at the event, Mr Portillo spoke about the UKs housing market and its current challenges.

One question posed during the subsequent Q&A session suggested that the government had been tinkering with housing policy, hitting landlords with increased taxation and risking a significant reduction in the supply of rented property. In response, Mr Portillo claimed that the “Government is deeply ashamed of its own housing policy” and suggested that by now discouraging landlord investment, they can hope to turn Generation Rent into a generation of homebuyers.

So called, Generation Rent has grown year on year since the early 1990’s, with the most significant rise between 2003 and 2016. During this period, the number of households in private rented property has more than doubled, from approximately 10% to over 20% of households. Recent projections released by Rightmove.co.uk suggest that by 2025, around 25% of households will be privately rented, with mortgaged households falling to an all-time low of around 25%.


Demand for rental property is continuing to rise and now that the Government have discouraged some landlords to invest, it seems that supply of rental property could reduce, further compounding the problem and resulting in even higher rents.

Figures from Rightmove.co.uk (April 2016) confirm that during the last seven years, online searches for rental property have increased year on year. During January 2009, just over 10 million Rightmove rental searches were made, compared to almost 90 million in January 2016.

In Evesham and Pershore, we have already experienced fewer homes becoming available to rent, during the first quarter of 2016 and expect this to continue throughout the summer. Meanwhile, over 29,700 tenant searches were made on Rightmove.co.uk during the last month for rental property in Evesham and a further 8,953 for homes available in Pershore.

Changing habits

It is generally true that in the past, youngsters have started out renting their first home with the aim of buying later on. However, home ownership is now becoming less of a reality for more and more potential first time buyers. Some are now continuing to rent until much later in life, while many accept that they will remain long term renters.

According to the DCLG English Housing Survey, published in February 2016, the number of private renters who expect to buy a home fell by 4% between 2013/14 and 2014/15. It seems that only around 57% of private renters now expect to buy.

Rising rents

With fewer available homes to rent and tenants appearing to stay in their homes for longer, it seems almost certain that rents will continue to rise during 2016 and beyond. Back in 2008/9, the average monthly rental in the UK was £663pcm. By 2014/15, this had increased by 17% to £776pcm, according to the DCLG Eng. Housing Survey.

In the meantime, house prices continue to rise across the district. Rightmove.co.uk data for April 2016 suggests that average prices in Evesham have increased by 8% during the last twelve months, while sold prices in Pershore soared by up to 15% since last year.

To sell or not to sell?

I can certainly understand landlords feeling battered by recent Government policy and starting to question their investment plans going forward. However, it’s crucial that they look at the big picture and answer some important questions first.

Robust tenant demand is likely to continue throughout 2016 and beyond, underpinned by the fact that it remains difficult for people to buy. With tenants staying longer and rents and house prices likely to rise further, do you really want to exit?

Which other investment class currently offers a better income return, growth potential and hedge against inflation than residential property?


What do you think?

If you’d like a chat about how recent changes could affect you or to discuss opportunities to maximise the return from your property investments, please feel free to give me a call on 01386 761515.

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