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Homelet’s recently released rental index shows UK rental prices have fallen in May for the first time since 2009 by 0.3% with the average rent now at £901.
This may not be statistically significant over a one month period, but the biggest regional fall was in London of 3% compared to May last year.
Martin Totty, CEO of Homelet, said “May 2017 saw average rents nationally fall for the first time in eight years when the economy had suffered the shock of the financial crisis. HomeLet rental data suggests landlords are now facing a difficult balancing act between ensuring rents are affordable for tenants in a low real wage growth environment whilst covering their own rising costs.
“Tenants will still need a vibrant and growing rented sector to provide them with property options at the time of their choosing. Any constraint to the supply of rental properties, because landlords are unable to achieve the reasonable returns they require, cannot be in the long term best interests of tenants, especially if, as we’ve now heard from all the main political parties, the UK’s population continues to grow.”
Conversely the first quarter figures from Belvoir show average rental price increases year on year of a more significant 5.75%. Belvoir are correlating this increase with a fall in supply of property stock within the PRS due to Landlords being hit with rising costs due to Section 24 mortgage interest relief reductions and the 3% stamp duty surcharge on second properties.
This is backed up by a report by ARLA a couple of weeks ago >> https://www.property118.com/number-rental-properties-managed-per-agent-london-falls-sharply/99032/
“Association of Residential Letting Agents (ARLA) figures for April show a drop in the number of properties managed by agents in London of 31.8% from 148 per branch in March to only 101 in April.
However, the total number in the UK actually rose from 183 to 185 per ARLA member office.
This Demand and Supply imbalance is showing in rising rental values and a decrease in tenants looking to renegotiate rents reductions in London.
The ARLA report also shows that the number of Landlords looking to sell is now 4 per office each month and for the first time since June last year the average tenancy length has dropped from 17 months to 18.
ARLA’s David Cox, reported “although the rental market in London has seen a large drop in the supply of properties available to rent it’s a different picture in the rest of the UK where we have seen little or no change to activity since March. It’s likely we’re seeing the rest of the rental market outside of the capital plateau as a result of the election in June, with renters potentially holding back on their property searches until after 8th June.
“It’s important that housing is at the top of the new government’s agenda, as we have had two elections and a referendum in the last three years which is stalling the policy process meaning that we do not have the right houses available to provide the homes people need.”
In London in particular the recent attacks on landlords are being felt with Stamp Duty and Section 24 mortgage interest relief reductions along with high property values and lower yields.”
Despite the blip in Homelet’s figures above the evidence from the vast majority of Property118 readers is that long term increase in demand for rental homes combined with the attacks on Landlords reducing supply mean the long term upward trend in rental prices all things being equal is likely to continue.
However, we will have to wait and see what effects Brexit will have especially in the London area.
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