Rents in the private rented sector continue to rise as supply falls
Rent increases in Britain continued to rise year on year in September while the number of homes available to let fell, according to the latest data from letting agents.
Some 31% of tenants in the private rented sector saw rents rise compared to 27% in September 2017 and 24% in the same month in 2016, the report from the Association of Residential Lettings Agents (ARLA) shows.
Looking at shorter term trends, however, this figure is down as in August this year, agents reported a record high for the number of rent rises for tenants at 40%.
Demand from prospective tenants fell marginally in September, with the number registered per branch dropping to 63 compared to 64 in August and down 20% year on year from 79 per branch in September 2017.
As landlords continued to leave the market, the supply of properties letting agents managed dropped to 194 per member branch in September, down from 197 in August.
‘Although the number of landlords increasing rents for tenants dropped in September, this figure is still alarmingly high, and it continues to rise year on year,’ said David Cox, ARLA chief executive.
‘Increasing costs and continued regulatory change is pushing buy to let investors out of the market and deterring new ones from entering. An average of four landlords took their properties off the market per branch in September, up from three this time last year, and as supply falls, competition among tenants increases, which is driving up rent costs,’ he explained.
‘With the Budget approaching, we hope the Government recognises the importance of increasing supply for tenants and uses it as an opportunity to make the market more attractive for buy to investors,’ he added.
The decline in the supply of suitable rental properties will do little to address the current challenges in the private rented sector, according to Adam Male, director of lettings at Urban.
‘The knock on effect of more buy to let landlords leaving the sector and the resulting shortage of stock will result in rental costs continuing to escalate in the mid to long term. While we aren’t quite seeing a mass migration of let landlords at present, the recent changes to stamp duty tax and other legislative restrictions have most certainly caused a number to exit the sector,’ he explained.
‘Further changes to tenant fees and the length and structure of tenancy agreements are only likely to aggravate this issue. There is an argument for longer tenancies to provide more security on both sides of the coin, but as ARLA’s data highlights, the average tenant only rents for 18 months,’ he pointed out.
‘To implement such a mass shake-up of the current rental market structure would be ill advised and as we’ve seen with previous initiatives, it often does more harm than good,’ he added.