A recent trend is for a growing number of home sellers to go into a rented property as there is a lack of properties available to purchase. Around 10% of tenancies this year have been to home owners who sold up which is the highest for the last five years. There are over 25% fewer homes to purchase in July than the same time last year.
Many sellers face pressure from their buyer to move as they struggle find their next home and so rising numbers of homeowners are renting instead. This enables them to retain the stamp duty holiday.
People making long distance moves are also becoming renters. This enables them to have a good look at a new area before they buy. It can be cost effective and prevent buying the wrong house in the wrong area.
However, there is a shortage of homes for tenants to rent. With more than 40% fewer homes available to rent in July than at the same time last year former homeowners ae also competing with longer-term regular tenants. Southern regions with the exception of London recorded the strongest annual rental growth.
The lack of rental properties underpins rental growth which remains well above normal levels and there is no sign that it will slow down over the coming months. This lack of stock can also suppress activity meaning fewer homes could be let in 2021 than in 2020 despite last year’s lockdown.