Rising rents, a doubling of tenant applications and a shortage of housing stock continues to put pressure on the Private Rental Sector in the UK, according to the latest lettings index report.
Average rents reached £774 per month in the second quarter of 2019, up 4.5% compared to the same quarter in 2018, the data from the Belvoir index shows.
Belvoir chief executive officer Dorian Gonsalves said that there are now the first indications that rent rises are feeding through to new tenancies.
Belvoir’s analysis of tenant applicant leads in June 2019 confirmed a dramatic increase in numbers when compared to those recorded in May 2019. ‘Although this rise is undoubtedly due in part to the impact of the tenant fee ban, the number of tenant applicants continued to rise in July, with an increase of 32% when compared to July 2018,’ he pointed out.
As uncertainty over Brexit continues, and tenant demand increases, the firm hopes that the Government will consider a more joined up and holistic approach to the rental sector, which will help to increase the supply of properties introduced to the market.
‘It is also important to remember that, apart from cost, many of the 13 million people renting a property in the UK are doing so due to lifestyle choices, whether this is due to employment opportunities, family commitments and many other factors,’ said Gonsalves.
Belvoir has also conducted a survey of a cross section of franchisees to obtain a more detailed snapshot of the market. Rental trends by property type revealed that 56% of offices reported an increase in rents for apartments compared to 2018 and 66% of offices reported an increase in house rents.
Overall the demand for houses remains stronger than for flats. High demand, lack of supply, Government changes, including concerns over the proposed ban on Section 21 notices, and the tenant fee ban were cited as the main reasons for rental increases, reduction in portfolio size and subsequent shortage of properties. The majority of Belvoir agents surveyed predict further rental increases in the third quarter of 2019.
The Belvoir index breaks down average rents by region, and some areas of the London market are now reporting severe stock shortages, with rents varying considerably from £1,267 per month in Gants Hill up to almost £2,000 per month in Kingston upon Thames.
Although some London areas rents fell quite dramatically, some Belvoir offices, such as Kingston upon Thames and Uxbridge, reported a small increase in rents, but any year on year rises are actually rents recovering back to 2017 levels, the index report says.
During the past 11 years average London rents have increased by about 4.8% per year. This increase is ahead of average inflation of 3%, but, being a capital city with affluent individuals seeking accommodation, and a market that is experiencing stock shortages, the rise is inevitable, it adds.
Outside of London, average monthly rents range from £629 and £638 in the North East and North West respectively, £771 in East Anglia and £783 in the West Midlands, through to £1,155 in the South East.
A review of Belvoir offices in Dundee, Edinburgh, Paisley and Falkirk revealed an increase in rents for flats and houses. Rents in Wrexham and Cardiff also increased, whilst in Swansea rents remained static but demand increased for flats and houses. Rents in Newtownards in Northern Ireland also increased.
