Supply and Demand
I dont think the problem is supply and demad at all. If there was a demand issue then people would be living in overcrowded accomodation. This is not the case generally.
The problem is that Buy to Let has mopped up property, and distorted the market. Instead of ones housing costs going to provide accomodation (and eventually buy a house) it is now doing that, and supply a pension for someone else.
There is a demand for renting because people move around a lot more, and dont want to commit, so rent - fuelling buy to let. Then the government comes along and throws petrol onto the fire to pay for the feckless and workshy - bumping up the income for buy to let landlords enabling them to go and get another mortgage, inflate the market that little more - and the cycle continues.
The finance industry were just supplying a service. What should have happened is that they felt the concequences of their folly, and yes, some should have gone bust.
We are all living in a parallel universe, where the recession has been papered over (with free money). Sense will return eventially, and those that stoked the fire will, should, get very badly burnt. Including those that take up all these schemes in an attempt to maintain artiicially high house prices.