According to the latest Association of Residential Letting Agents figures, rents have been particularly hit in central London as would-be sellers have to rent out their property due to the difficult economic conditions.
We have only seen anecdotal evidence of the accidental landlord phenomenon and my own view is that the concept is a little overblown and is concentrated to one or two areas of the country, such as London.
Indeed, the very notion that the accidental landlord is significantly increasing rental supply must be flawed. After all, if these people are letting their property out, they will need to rent or buy another home, taking another property off the market elsewhere such that the two transactions have a balancing effect.
As ARLA’s own figures show, rental levels are fairly stagnant throughout the rest of the country and have risen marginally in the south east. This is to be expected and can be attributed to a number of reasons, not just an increased level of supply.
Rental incomes had to take a breather after a sustained period of growth over the past 12 months and it has become harder for landlords to set higher rental levels when their tenant customer is already struggling financially in today’s economy.
The private rented sector desperately needs long-term investors to satisfy future demand. This has been recognised by both the Government and the recent independent Rugg Review of the sector, which said that more should be done to encourage private investment in the PRS.
If accidental landlords have lifted supply, it is only for a temporary basis as they will eventually sell the property when normal market conditions return. This could be both disruptive to the local rental market and the tenant, who will have to leave the property.
In contrast, buy-to-let investors that adopt a long-term outlook provide the stability that the UK housing market desperately needs.