The private rental sector could be forced to play the role of Atlas and carry the weight of the mortgage market on its shoulders to prevent a housing crisis.
Figures out last week from Countrywide show that in Q3 2010 more than 61,000 new tenants registered for rental accommodation – a 19% increase on Q2.
July saw over 20,000 new tenant applications, the highest number for a single month since records began.
David Whittaker, managing director of Mortgages For Business, says it will be chaos when social housing is cut by half and demand for rental property soars.
He says: “The private rental sector will have to play the role of Atlas, holding up the market to prevent a housing crisis.
“It will be tough, but new entrants to the lending market are loosening the funding squeeze we’ve been suffering for so long. We need other lenders to follow suit.”
He adds: “They need to wake up and realise that professional land-lords are going to be the housing market’s only hope over the next few years.”
Countrywide says a combination of demand and supply issues have caused the number of properties available to rent to fall by 6.9% in Q3, compared with Q2 2010.
This is a 27% fall on the number of properties available to rent in Q3 2009.
There is now an average of 5.8 tenants vying for each property across the UK – up from 5.5 in Q2 2010.
John Hards, co-managing director of Countrywide Residential Lettings, says: “The private rental sector is the only viable option for a growing number of people and this will intensify in the wake of cuts to the social housing budget.
“The government must do more to incentivise cash investors and help private landlords in need of buy-to-let funding.”