Could the nation's empty homes be the key to alleviating rental property shortages?

Britain’s private rented sector (PRS) has suffered from a shortage of rental properties for a while.

At least some of this scarcity stems from the high number of empty homes nationwide, with more than 250,000 long-term vacant homes in England alone.

So could the nation’s empty homes help to alleviate the rental property shortage?

The Local Government Association (LGA) defines an empty home as “one that has no permanent occupier or can be defined as a property where the main resident lives elsewhere.”

As a general rule of thumb, dwellings that are unoccupied and unfurnished for six months or longer are typically considered “long-term vacant”. 

However, local councils usually have some discretion in deciding if a property falls under this definition for council tax purposes.

Meanwhile, the second, broader definition focuses on whether the property serves as someone's primary residence. This includes holiday homes and second homes that are owned for investment purposes.

The answer to this question largely depends on the data and definition you use. In the broadest sense – which incorporates short-term vacancies, second homes, and long-term vacant dwellings – there were 1.5 million unoccupied properties in England and 120,450 in Wales, according to the most recent Census data from 2021.

However, Action on Empty Homes reported that the number of long-term vacant properties in England reached 261,189 in 2023, based on the latest government figures.

According to the Big Issue, “That figure represents a rise of 12,556 homes compared to 2022, up 5% annually and 16% since before the pandemic in 2019.” 

The most recent housing statistics from the Scottish Government suggest that north of the border there are 24,061 second homes, a further 47,293 unoccupied exemptions that have been empty and unfurnished for less than six months, and 46,217 long-term empty properties that have remained empty for more than six months. 

The latest figures from Wales suggest that there are around 27,000 long-term vacant homes across the Principality.

“In the midst of a housing crisis, we cannot afford to waste homes,” says Action on Empty Homes. “In England over 100,000 families are trapped in often poor quality, insecure Temporary Accommodation whilst many more rough sleep. Thousands of families are under stress trying to find an affordable home to rent or buy.”

A major driver of those stresses for many tenants currently navigating the private rented sector (PRS) is the sheer lack of rental properties available.

Rising costs, tax changes and shifting regulations have led to many landlords reducing their portfolios or leaving the market altogether in recent years.

That’s according to research conducted by the London School of Economics on behalf of the National Residential Landlords Association (NRLA). 

“The number of landlords leaving the PRS has risen in recent years,” says HomeLet and Let Alliance CEO, Andy Halstead. “This has reduced the available rental stock and driven up rents as more renters compete for fewer rental properties. Needless to say, this puts the country in a clear ‘cost of renting crisis.’”

Our own HomeLet Rental Index, which provides the most comprehensive and up-to-date data on rental values based on data that we collate from actual achieved rental values, illustrates Andy’s point.

According to our April figures, average UK rental prices rose by 1.6% (the equivalent of £21 extra per month) from March to April. 

Modest as that may sound, this increase is just one of many in recent months. Nationwide rental prices have risen by +7.9% in the last year and have rocketed by an astonishing +35.8% since pre-pandemic rates.

Renters are now paying a third of their wages (33.3%) in rent, with Londoners paying nearly two-fifths of theirs (39.1%).

“A trajectory like this could see rental prices increase by almost 20% over the next 12 months, which would be the equivalent of over £250 more being paid out each month by the average UK tenant,” Andy continues. “A rent-to-income ratio of over a third, that continues to creep up, is not sustainable for anybody,” he adds.

Empty homes could potentially be part of the solution to rental property shortages. If even a proportion of empty homes could be converted into rentals, it would add to the available housing stock, easing rental pressure and lowering rents.

Filling empty homes also reduces urban blight and improves neighbourhood security.

However, it isn’t an easy fix. Many empty homes might be second homes, holiday lets, or in need of repair. This can inevitably make them unavailable or unsuitable for immediate rentals.

Further incentives may also be needed to encourage owners to rent out their properties, especially if they face bureaucratic hurdles or tax disincentives.

Furthermore, a share of empty homes is likely to be concentrated in areas with lower rental demand or be unsuitable for conversion into affordable housing units.

Therefore, although empty homes certainly have the potential to contribute towards solving ongoing rental shortages, it's a complex issue with no simple answer.

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