UK Housing Stock Growth to Slow Until 2027: What Landlords Need to Know and Do Now

Understanding the OBR’s Housing Stock Forecast

The Office for Budget Responsibility (OBR) has projected a significant slowdown in the growth of UK housing stock — by about 40,000 fewer homes per year — lasting until 2026-27. After this period, the OBR expects a rapid increase to over 300,000 new homes annually by 2030-31, contingent on the success of government planning reforms.

For landlords, this forecast signals a tightening in housing supply in the short to medium term. The reduction in new homes entering the market could exacerbate existing supply-demand imbalances, which typically drives up prices and rents.

Why This Matters for Landlords

The immediate impact of slower housing growth is likely to be felt in urban areas with high demand, such as London and other major cities, where supply constraints are already acute. For landlords, this creates both challenges and opportunities:

• Increased Rental Demand: First-time buyers facing affordability issues due to fewer homes on the market may delay purchases, extending their time as renters.
• Potential for Rent Growth: Tighter supply can justify rent increases, but landlords should balance this against tenant retention considerations.
• Greater Scrutiny on Planning and Development: Local planning decisions will be pivotal in shaping supply, affecting future rental market dynamics.

Impact Across Landlord Profiles

• Single-Unit Landlords: May see increased demand and could consider modest rent adjustments, but should remain mindful of tenant affordability.
• HMO Landlords: Shared accommodation may become more attractive to cost-conscious renters unable to buy, potentially increasing occupancy rates.
• Portfolio Landlords: Opportunity to optimise portfolio mix by focusing on areas with constrained supply and strong rental demand.
• Accidental Landlords: Might experience longer tenancy durations as tenants delay homeownership plans.

Practical Steps to Prepare and Adapt

1. Review and Adjust Rental Pricing Strategies: Analyse local market rents regularly and consider incremental increases aligned with demand and tenant profiles. Use local rental indices and platforms for benchmarking.

2. Engage with Local Planning Developments: Monitor planning applications and consultations via council websites or local forums. Early insight into new developments can inform investment and letting strategies.

3. Communicate Transparently with Tenants: Keep tenants informed about market conditions and any rent reviews. Transparent dialogue supports retention and reduces disputes.

4. Advise Clients on Affordability and Support Schemes: If managing properties for clients, update them on schemes like Help to Buy 2.0 or other government initiatives that may influence tenant or buyer behaviour.

5. Prepare for Operational Adjustments: Anticipate longer tenancy durations and plan maintenance and tenant engagement accordingly.

Benchmarking and Data Gaps

While the OBR provides national-level forecasts, regional variations are significant. Landlords should:

• Use local authority housing data to track supply changes.
• Consult agents and property market reports for granular rental and sales trends.
• Monitor government and industry updates on planning reform implementation.

Next Steps for Landlords

• Schedule quarterly reviews of rental pricing and tenant turnover.
• Allocate time monthly to review local planning news.
• Initiate conversations with tenants about their housing plans and affordability.
• Explore opportunities to diversify or optimise property portfolios in response to supply trends.

How Rentals & Sales Can Support You

Our team specialises in portfolio reviews, compliance audits, and pricing strategies tailored to evolving market conditions. We can help you:

• Analyse your current rental pricing against local market data.
• Navigate compliance and operational changes amid shifting tenant demographics.
• Develop a strategic plan to maximise returns during periods of supply constraint.

Contact us to arrange a consultation and ensure your lettings business is positioned to benefit from these market changes.

Disclaimer: This article provides general information and should not be taken as financial or legal advice. Landlords should consult relevant professionals for advice specific to their circumstances.