In addition to more landlords buying properties, the number of landlords selling their properties is also down, according to the survey by the Association of Residential Letting Agents (ARLA).
The proportion of ARLA members who think landlords are currently increasing their net investment in the private rental sector (PRS) by buying properties has risen from 30% to 39% over the last three months, indicating that rental property is still perceived as a safe investment amidst ongoing financial instability.
The research also found that the proportion of landlords selling their properties is also down incrementally on the previous quarter, from 15% to 14%, again indicating sector confidence.
Despite this positive investment background tenant demand has actually weakened slightly in the second quarter. ARLA's research shows that 54% of respondents said that there are more tenants than properties, a decrease from the 57% seen in the first quarter.
‘Our research shows that rental properties are still seen as a good investment option, despite the challenging economic climate. The slight slowing in tenant demand is worth noting, but the overall trend is still a continued appetite for rental homes,’ said Susan Fitz-Gibbon, president of ARLA.
On balance ARLA members report increased achievable rent levels over the last six months on all types of rented property. The average proportion of respondents across all property types who say they think achievable rent levels have increased over the last six months has changed little since the last survey, but rose marginally from 34.4% to 34.7%.
The overall average capital asset value of rented houses has risen by 0.5% over the last three months, the second increase in succession. Over the same period, the average value of rented flats throughout the country rose by 3.8%, also the second increase in succession. This increase has come as a result of increases in the average value of rented flats for those managing properties in Prime Central London, up by 3.4%, for those in the rest of the South East up by 4% and for those in the rest of the UK up by 4.7%.
Since the last survey three months ago, demand in the rented residential property sector has weakened a little in terms of the overall proportion of respondents saying that there are more tenants than properties available for them, with the figure falling from 57% to 54%, more than reversing the increase seen then.
This overall decline was reflected in all of the broad geographic areas with the figure for Prime Central London falling from 35% to 32%, that for the rest of the South East falling from 69% to 66% and that for the rest of the UK falling the least, from 58% to 57%. Compared with three months ago, the average void period is up from 2.9 weeks to three weeks, once again reversing the increase seen then, whilst the average number of new tenancies signed up in the preceding three months has risen from 32 to 34 tenancies, in line with the usual seasonal trend for the second quarter.
The average proportion of ARLA members’ offices’ portfolios which are made up of investment property is virtually unchanged compared with three months ago at 56%. However, the average number of purely investment properties which are managed by ARLA members’ offices is down from 156 to 149 properties, partially reversing the big increase seen three months ago.
On average, ARLA members say that tenants remain in the same property for a period of 19.8 months, a figure which is up slightly from 19.7 months in the first quarter.
The proportion of ARLA members’ offices who believe that they are seeing an increase in rental property coming onto the market because it cannot be sold has fallen again over the last three months but not as dramatically as it did last quarter. This quarter, the figure fell from 29% to 26%. Detached and semidetached houses are still the types of property most likely to be coming onto the market for this reason.
There has been another fall in the proportion of ARLA members’ offices saying that they have seen an increase in the number of tenants struggling to meet rental payments in the last six months with the figure declining from 39% to 36%. There has also been a decline in the proportion saying that they have seen an increase in tenants haggling with landlords over rents in the last six months with that figure falling from 50% to 49%, partially reversing the increase seen last quarter.
Over the last three months, there has been a fall in the proportion of ARLA members’ offices saying that they are aware of an increase in tenants asking lenders for references on potential landlords to ensure they are financially viable, with the figure dropping from 10% to 9%, once again reversing the change seen three months earlier.