Rents remained fairly static in the fourth quarter of 2017 as tenants do not have much spare cash at a time when inflation and is rising and wages depressed, new data suggests.
Indeed, in London some areas have seen rents fall slightly, according to the latest report from nationwide lettings franchise Belvoir.
The lowest rents in the fourth quarter were in the North West at £597 compared to £630 in the North East while the highest rents were in the South East at £1,046 and London rents averaged £1,431.
Belvoir chief executive officer Dorian Gonsalves pointed out that with the exception of London and the South East, rents have been relatively stable since 2008 and any rises have tended to be quite small, up to £25 a month, if at all.
‘In the main, most Belvoir franchisees are now predicting a rise in flats and house rents, whereas in the past predictions were that rents were to remain static. However, rents for rooms, student and housing benefit tenants are expected to stay relatively stable,’ he said.
The report also reveals that demand was static to falling and there continues to be a shortage of three bed semi-detached and terraced properties, followed by two beds, although shortages have fallen compared to the third quarter of 2017.
Tenant choice remains better for one and two bed flats and franchisees are predicting that tenant demand is likely to remain the same for different lets and the main demand versus supply pressure will continue to be on houses.
‘Tenants are continuing to stay in their properties longer, with over 52%preferring a tenancy of 13 to 18 months, and 23% opting to stay for 19 to 24 months and despite the time of year, tenant arrears and evictions fell back in the fourth quarter, with nearly 90% of Belvoir offices carrying no or just one eviction.
‘This is a fantastic achievement which proves that when a tenant works with a self-regulating agent there are hardly ever any evictions because the referencing process works so well. It also shows that even when tenants have the option for longer tenancies they are not taking it up, but choosing to move on and questions the necessity for mandatory longer tenancies,’ Gonsalves pointed out.
The survey also asked franchisees for their views regarding proposed Government legislation on the safety of rental homes, and whether they thought tenants would be likely to take landlords to court, or simply move when their agreement ended.
In the main, less than 10% of Belvoir franchisees thought that less than 10% of tenants would take any action and students would be the most likely to do so. ‘However, it should be pointed out that due to the high standard of Belvoir stock, most properties would not come under this scrutiny as they are let legally and safely,’ added Gonsalves.
But there are signs that landlords are leaving the private rented sector. Over 85% of offices reported that landlords are selling some properties. The largest number of properties being sold remains up to three per branch. Overall in 2017, a higher proportion of offices, 15%, saw six to 10 properties sold, a higher percentage than seen in the previous year.
‘For some time Belvoir has been warning that Government steps to reduce buy to let stock will not help tenants in the future, as it simply means that they have will nowhere to live. Although we are still seeing landlords buying properties, the numbers are reduced,’ said Gonsalves.
‘The big question is; how much of influence is the Government’s pressure on landlords having? In reality, although we are seeing slightly less demand from tenants than in the past, there is a lot less stock coming on to the market,’ he explained.
‘Although we are not seeing any evidence of a big landlord sell off, it must be taken into account that landlords have only just completed their tax returns, and this will be the first time since mortgage relief rates were partially reduced. This being the case, we are not expecting to see anything definitive until the third quarter of this year,’ he concluded.
