The rental market received a boost of 8% more new properties advertised to rent in the second quarter of the year compared to the same quarter in 2015, according to the data from property portal Rightmove.
The majority of new properties were in London, up by 22% on the same period last year, resulting in a small drop in the region’s average asking rental price to just under £2,000 per month.
Despite the increase in supply, all other regions recorded a rise in average asking rents this quarter, with the East of England’s 5% annual change leading the way.
The data also shows that rental enquiries were up 2% in the second quarter 2016 compared to last year, and up 1% in the two weeks after the referendum compared to same two weeks in 2015, as the lettings market shows no immediate signs of a Brexit impact.
The supply boost failed to stop rents rising 2.8% in the second quarter outside London in England and Wales, though this is only 0.1% higher than the rise in the second quarter of 2015. The East of England’s year on year increase of 5% was the highest of all regions, while the South East saw rents increase the most over the quarter, up by 5.1%.
London saw the biggest increase in supply this quarter compared to any other region with growth of 22%, resulting in a fall in average asking rents by 1.1% to just under £2,000 per month.
‘The big spike in March transactions resulting from a large number of investors beating the more punitive stamp duty tax deadline has created a rental supply boost which is good news for prospective tenants actively looking for a new place to live,’ said Rightmove’s head of lettings Sam Mitchell.
‘Now that the stamp duty changes have come in this boost may be short-lived, as landlords consider whether or not to make further purchases. Our own research among landlords shows that just under a third of them are concerned that the stamp duty changes, plus the forthcoming tax relief changes, will potentially wipe out their profits,’ he explained.
‘Once the tax relief changes start to be phased in from next year new buy to let activity could slow further. However rental demand is still outstripping supply in many areas of the country so we may see a shift by investors to look in areas that offer better yields for long term property investments,’ he added.
The report suggests that investors planning to continue expanding their portfolio could look to some of the areas with highest demand from prospective tenants. The top five places include Ashton-Under-Lyne, Stalybridge and Oldham in Greater Manchester where average asking rents for two bedroom properties are around £520 per month and you can buy a two bed home for around £100,000.
Demand as measured by email and phone enquiries for rental properties from prospective tenants to agents on Rightmove was up 2% this quarter compared to the second quarter in 2015, and up 1% year on year in the two weeks immediately following the referendum result.
‘Whilst it’s too early to speculate or predict any long term impact of Brexit for the rental market, these latest figures show that it’s business as usual for tenants looking for a place to rent,’ said Mitchell.
‘Naturally we saw a dip in demand the three days after the referendum result, but that soon returned to usual levels of searching. If confidence in buying houses does falter it could lead to more people looking to rent, perhaps in the short-term, and that would mean that rents could rise further,’ he added.
According to Debbie Pennell, lettings director of Robinson-Jackson in London and Kent, it will be easy to attribute any recent fluctuations in lettings to Brexit, but measuring results and performance this year will be especially hard.
‘The new increased buy to let stamp duty levy combined with the stepped demise of mortgage interest tax offsetting is just as responsible for a pause in activity in the second quarter of 2016 as the referendum build up. Politics aside, we are reporting a healthy number of investors still actively looking to purchase buy to let properties,’ she explained.
‘With interest rates looking to slide, the long term rewards of a buy to let are still tempting, even if the short term gains are eroding to almost nothing for many landlords. Interestingly, we have looked at the number of landlords selling their investments in recent months compared to the same period in 2015,’ she added.
