Letting agents are feeling increasingly pessimistic about the future for the buy-to-let market after the stamp duty surcharge comes into force in April.
Two in five letting agents now predict that rental supply will decrease over the next five years.
That is a sharp rise from October and is the highest rate this year, according to the Association of Residential Letting Agents (ARLA) monthly private rental sector report.
ARLA managing director David Cox said Chancellor George Osborne’s the surcharge poses a serious threat to buy-to-let.
“We said these changes would be ‘catastrophic’ for the rental sector and this has been echoed by letting agents across the country.
“The new stamp duty increases will make owning a buy-to-let unprofitable for a lot of landlords, and certainly make new investors think twice about purchasing an investment property.”
ARLA’s report also shows the number of tenants facing rent hikes continues to fall, with just 23% reporting increases in November, the lowest this year.
Demand for rental properties increased marginally in November, alongside supply of available housing, ahead of the New Year.
ARLA agents registered an average of 34 new tenants per branch this month, up from 33 in October.
Supply of rental accommodation also increased in November, rising by 9% from an average of 173 properties per branch in October, to 189 this month.
Renters in London will still struggle to find a property, with only 121 properties managed per branch – 36% less than the UK average.
David Cox continued: “It’s promising to see that the number of agents reporting rent increases is continuing to decline, and this should spread some Christmas cheer amongst renters renewing tenancies or looking for a new property to rent.”