Lack of new properties to let putting pressure on prospective tenants

Lack of new properties to let putting pressure on prospective tenants

10:01 AM, 14th May 2021, About 7 months ago 11

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A slowdown in the supply of new homes in April has seen price growth accelerate across the UK, according to the RICS Residential Market survey, April 2021. Meanwhile, a lack of new properties to let has also put pressure on prospective renters.

Tenant demand for rental properties picked up over the quarter to April – with a net balance of +60% citing an increase across the UK. This is an improvement on January’s figure of +14%, which respondents put down to the loosening COVID-19 restrictions and the positive outlook as more adults are vaccinated. However, this is met by a falling supply of vacant rental properties which respondents predict will place upward pressure on rents).

Looking at new buyer demand, a net balance of +44% of respondents saw enquiries pick up over April (nearly unchanged from the previous +43% in March). For the first time this year respondents reported new buyer demand was positive across every region.

A lack of fresh listings was the biggest concern cited by respondents – with many saying it was not nearly enough to match the interest shown by potential buyers. Respondents reported that new instructions from owners looking to sell-up eased significantly, with the latest net balance of -4%, marking a steep decrease from +21% in the previous month. On top of this, stock levels reported by estate agents dropped, with the average number of properties on their books now at 40, having stood at 46 in December 2020.

Unsurprisingly, therefore, house price growth rose again in April – with a net balance of +75% noting an increase in prices at the headline UK level. This is up from +62% in March and the highest growth seen over the last three surveys conducted. More respondents also predicted prices going upwards over the next quarter, with net balance of +47% in April, compared with +43% in March, and this increased to +68% when looking at the next year as a whole.

Agreed sales were up over the month with a net balance of +34% reporting deals on homes completing – however this was seemingly at a slower pace than in March (+48% net balance). Short term expectations for future completions were also positive as a net balance of +23% of respondents said they were expecting more sales. This positivity cooled off when looking longer term as just +12% thought more sales would complete over twelve months – possibly in anticipation of the stamp duty holiday ending in its current form at the end of June (followed by a tapered withdrawal through to September).

Simon Rubinsohn, RICS Chief Economist, said:

“Housing supply, or more pertinently, the shortfall in supply relative to demand is the key theme coming through loud and clear from respondents to the latest RICS survey. While it may be simplistic to assume that higher numbers alone can redress the affordability issue particularly in a low-interest rate environment, an uplift in delivery does have a role to play.

“Planning reforms as outlined in The Queen’s Speech are likely to provide part of the answer, although it is critical, particularly with regard to permitted development rights, that quality and safety are not compromised.

“Ensuring a broad range of tenures in the delivery pipeline is also important with anecdotal evidence from the survey emphasising a severe lack of stock in the private rental market as likely to drive up rents sharply over the next year.”



Comments

by Chris @ Possession Friend

12:47 PM, 14th May 2021, About 7 months ago

Wow, that RICS lot are a clever bunch - who'd have thought that !

by Bristol Landlord

18:30 PM, 14th May 2021, About 7 months ago

This article is mostly about a lack of houses for sale rather than for rent.
However, (irony alert) how many sentient human beings could possibly have predicted there would be a lack of places to rent, and predictably leading to increased rents, after several years of a savage Govt onslaught on landlords!!!

by Chris @ Possession Friend

21:12 PM, 14th May 2021, About 7 months ago

Reply to the comment left by Bristol Landlord at 14/05/2021 - 18:30
350,000 known legal migrants a year ( plus the thousands of illegal, dinghy, trafficked etc ) and around 70,000 homes built.
Not taking into account natural population expansion and this has been replicated for decades. !

Wonder why there's a shortage of homes ?

by Ian Simpson

7:26 AM, 15th May 2021, About 7 months ago

Lots of tenant demand certainly, but none who are willing to actually pay rent. We have about five voids at the moment as cannot find people actually willing and able to pay. I have decided to sell out altogether...

by Chris @ Possession Friend

9:36 AM, 15th May 2021, About 7 months ago

Reply to the comment left by Ian Simpson at 15/05/2021 - 07:26I know a small % of Landlords are diversifying, which can mean a whole lot of things. ( which includes selling some of their properties and other financial strategies )

by Martin S

19:51 PM, 15th May 2021, About 7 months ago

Reply to the comment left by Ian Simpson at 15/05/2021 - 07:26
What part of the country are you refering to? Lack of tenants wishing to pay? That's certainly not the case where I have properties. What brings matters home, and acts as a reality check, is when you take a stroll around the High St, as I did this afternoon, and look in the windows of employment agencies, and see how much people are being offered for their labours. Agencies proudly offering £9.50 per hour, so for a 37 hour week, before stoppages, workers receive £351.50. I note that for those over 23, the national minimum wage is £8.91 per hour, so just under £330 per week before stoppages.

I certainly wouldn't like to try and live on that sort of income, even if single, and living in a caravan. I suggest that many people can't afford rents, even if they want to do so. Here we are, supposedly living in one of the wealthiest countries in the world, with what is still basically a feudal system. The terms Landlord & Tenant continue to underline this division.

The Covid situation has certainly exaggerated the basic inequalities in our society, and I have no doubt that, provided your properties are in a fit state, that there would be many who would love to live in them, but are not financially secure enough to take them on. At least they are being responsible in accepting the fact, and not causing you any problems with arrears, even if it is galling to have 5 properties sitting empty.

by Chris @ Possession Friend

21:24 PM, 15th May 2021, About 7 months ago

Reply to the comment left by Martin S at 15/05/2021 - 19:51Martin's spot on that this country has had more than 6 years of Austerity ( apart from MP's ) but whilst the govt can control wages, they can't control prices.
Hence its right that most people on low wages struggle to afford everything, including rent.
Of course if your on benefit, doing a bit on the side - perversely your better off, especially if you don't pass the Housing element of your UC onto your landlord - aided and abetted by DWP. ( And nobody can understand why landlords don't want to rent to them ! )
Meanwhile, back at the ranch - the cowboys in MHCLG joined at the camp fire by Tenant groups, blaming landlords for rent increases ( nobody else for the cost of living increases tho ! )

by Monty Bodkin

10:29 AM, 16th May 2021, About 7 months ago

Reply to the comment left by Martin S at 15/05/2021 - 19:51He said 'voids' not properties, presumably HMO's.

by Monty Bodkin

10:32 AM, 16th May 2021, About 7 months ago

Average UK working week is 42.5 hours, average 30 something pay is £16 per hour.

Landlords are being forced out, those landlords remaining will obviously choose the best tenants most able to pay and increase rents accordingly.

It's not landlords who are to blame for this.

by The Forever Tenant

13:26 PM, 18th May 2021, About 6 months ago

Reply to the comment left by Monty Bodkin at 16/05/2021 - 10:32According to the ONS the average worked is 36.9 hours a week. If you add all overtime worked on top of that, it becomes 40 hours a week.
For hourly pay, depends on if you are looking at the Median or the Mean for your average, as the hourly rate is skewed considerably by the top earners. Median is £13.68 and the Mean is £17.57.
Just for completeness sake, the Mean for hours worked per week is 32.6 hours.
As always, take London out of the equation and the hourly rate drops considerably.

EDIT: I just did the maths. Take out London and the average hourly rate becomes £10.98.

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