An exodus of landlords from the buy-to-let market has caused a 12% drop in rental property listings over the past 12 months, Home.co.uk claims.
The property search engine currently says there are 228,033 houses, flats and rooms to rent across England and Wales.
It warns that buy-to-let taxes and Right to Rent rules have deterred landlords, with London the hardest hit.
Home.co.uk’s data shows there has been a 20% fall in rental supply in the capital, especially in richer areas where rents have in turn soared.
This was led by Westminster, where listings have slid by 447 to 2,673 over the past 12 months, pushing the average monthly rent up 24% to £5,292.
Kensington & Chelsea has 427 fewer listings at 1,584 and has seen rents rise by 14.7% over the past year to £5,502.
Doug Shephard, director at Home.co.uk, described the situation as a “rental drought”.
He said: “The current situation is particularly dire for tenants, who are set to continue to face increasing competition for good-quality properties and rising rents.
“Government red tape and higher taxation in the lettings market has triggered forced sales by landlords. Moreover, this additional supply is now negatively impacting on capital values.
“Vendor landlords have done their maths and they know that if they continue to let the property, even with a rent hike, they will be losing money overall. Conclusion: time to sell.
“The problem is, though, that the private rented sector constitutes 20% of the housing stock, the majority of which is owned by landlords with small portfolios. A recipe for disaster? Maybe.
“Negative sentiment in this sector is certainly sufficient to turn confidence in the wider property market to the downside, thereby creating misery for all, especially those wishing to rent.”
Source: Property Industry Eye