Rental cost and increases at record levels

by Property 118

14:40 PM, 27th September 2018
About 4 weeks ago

Rental cost and increases at record levels

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Rental cost and increases at record levels

In August, the number of tenants experiencing rent hikes increased to 40%, from 31% in July. This is the highest figure recorded since records began in January 2015 and the highest level every in August.

Year on year, this figure has increased from 35% in August 2017 and 27% in August 2016.

ARLA Propertymark is today issuing its August Private Rented Sector (PRS) Report.1

David Cox, ARLA Propertymark Chief Executive, said: “As we’ve highlighted before, the impact of recent and ongoing tax changes continues to have a material impact on the buy-to-let market. Four in ten tenants saw their rents rise in August – the highest level we’ve seen since records began. Although it’s encouraging to see the number of properties available to rent rising, supply still isn’t anywhere near high enough to slow down the pace of rent rises. We need more homes to rent, and for Government to change its narrative and recognise the very valid role buy-to-let plays in the housing mix. Driving small landlords out of the market ultimately impacts tenants most.”

Demand from tenants

  • Demand from prospective tenants fell significantly, with the number of house-hunters registered per branch dropping by 19% in August to 64 on average, compared to 79 in July.
  • Year on year, demand is down 11% as there were 72 prospective tenants registered per letting agent branch in August 2017.

Supply of rental stock

  • The supply of available properties rose to 197 in August, from 184 last month.
  • This is the highest figure seen since December 2017, when supply stood at 200.
  • Year on year, this figure is up four per cent from 189 in August 2017.

1 Opinium Research carried out an online survey among 191 ARLA members from 29th August – 13th September 2018. ARLA Propertymark Protected letting agents were surveyed on a number of key rental sector issues including supply and demand, the management of BTL properties, and monthly rent prices. www.opinium.co.uk

2 Based on new option ranges, so comparisons beyond April 2017 unavailable



Comments

Ian Simpson

21:28 PM, 27th September 2018
About 4 weeks ago

As demand is down 11% and supply is up 4% , it only makes sense that rents are being driven DOWN , not up!! This is certainly what I have seen ... several of my tenants have asked for reductions to stay on, new tenancies are having to be offered at lower rents than the old ones were renting for and the overall demand for properties to rent is, in my eperience, dropping alarmingly.
This is completely in contrast to the predicted rent hikes necessary to offset s24 costs , extra SDLT costs, tenancy fee costs and so on.
I think a lot of it is to do with uncertainty over Brexit. A lot of European nationals are just up and leaving at the moment, professionals and blue collars alike; and as a result, the rental market is suffering dramatically. Maybe I am in the wrong part of the country, (Home Counties) but I am certainly not seeing the boom in rental hikes which gets endlessly predicted on these forums I am afraid, in fact, quite the opposite.

NW Landlord

12:23 PM, 28th September 2018
About 4 weeks ago

Not my experience

Annie Landlord

12:45 PM, 28th September 2018
About 4 weeks ago

These reports are so often contradictory! My experience (NW England) is that many landlords have raised rents, largely due to S24, fewer landlords are buying and there are fewer buyers for property at the lower end of the market. Where are all the FTBs?

Simon Williams

14:49 PM, 28th September 2018
About 4 weeks ago

Reports do indeed contradict. For example, it was reported on the website PropertyWire just 3 days ago that:
"The number of available properties to rent in the private rented sector in the UK is falling at an alarming rate, particularly in Greater London, according to new figures.
The number of available homes to rent in Greater London that have been on the market for 20 weeks or less plummeted by 24% over the last year, from 52,388 in August 2017 to 39,746 in August this year, the latest report from Home.co.uk shows.
Indeed, the report points out that the number of homes to rent in the area is at its lowest level since March 2015 at a time when rents have risen by 4% over the last 12 months.
Across mainland UK, the supply of all available homes to rent, including hard to rent properties that have been on the market for more than 20 weeks, has fallen by more than 10,000 since July 2017, from 233,453 to 223,115."
So - there you go!
In my experience as a London and Cambridge landlord, there was a pronounced drop in demand in the aftermath of Brexit (coupled with a general improvement in the EU youth unemployment situation). This roughly coincided with a glut of rentals coming on to the market as landlords brought forward their last purchases to beat the new 3% stamp duty surcharge. By then, most tax changes, particularly as regards mortgage interest, had been announced but had not impacted the market. My rents went flat (except for 1 bed flats!).
In my opinion, the market is now on the turn again. Demand is definitely going up again - albeit slowly - and supply is definitely dropping. I believe this improvement will accelerate as supply continues to drop due to the tax effects starting to kick in; rising interest rates; and new regulations. Assuming a deal is eventually done on EU nationals in the UK, I think demand will continue to pick up.
I personally have no concerns about being able to get bums on seats in the years ahead. Just about everything else about the direction of travel of the PRS and politics generally terrifies me.
And one last (unrelated) point: I read that a recent survey of 15,000 people by the bank ING says that 35% of young Europeans think they will never own their own home. The figures are highest in Germany 45%, Italy 44% and then UK 41%. So, the next time you are made to believe by the media that the UK market is "broken" and it's all so much better on the continent for young people, bear that survey in mind.

Chris Clare

15:02 PM, 28th September 2018
About 4 weeks ago

I think this is one of those very misleading surveys.

For one thing it states "with the number of house-hunters registered per branch dropping by 19%" These statistics are based on the amount of branch registrations. This has been changing for a few years now with most tenants skipping the agents altogether and just going straight to RightMove for their property search. RM is far more responsive if you are being quickly priced out of a fast moving market and tenants have realised this hence the change in the way they search. This doesn't mean a reduction in the amount of prospective tenants but just a change in their sourcing behaviour.

We are finding that tenant demand is significantly higher than it has been in the last 20 years so much so that two of our properties have re-let over the last 6 months at at least 30% more than the outgoing rent.

For our region at the very least, tenant demand is rising, available stock is reducing and as such rents are rising. Basic supply and demand.

Gary Bray

15:11 PM, 28th September 2018
About 4 weeks ago

"Four in ten tenants saw their rents rise in August"

I suspect that someone has misread or misinterpreted the data here. They're saying that 40% of tenant received rent rises in August alone!

Further down in the article the numbers showing falling rental demand and a higher supply of property for rent certainly aligns with what I'm seeing. S24 never did stem the supply as so many predicted.

Paul Shears

21:44 PM, 28th September 2018
About 3 weeks ago

well rents are certainly rising around my area and I expect this to continue providing the agents of the state do not succeed in destroying the private rental sector round here by other means.

Michael Barnes

23:48 PM, 28th September 2018
About 3 weeks ago

What it really means appears to be
"ARLA members have increased rents for 40% of the properties they manage in August".

So it takes no account of those of us who self-manage and put up rents infrequently.

Agents will try to put up rents whenever they can, to get themselves more money.

Mick Roberts

12:19 PM, 29th September 2018
About 3 weeks ago

Rents are rising in Nottingham too with Selective Licensing giving Landlords extra costs and Landlords selling, so tenant's struggling to get houses.
And Letting Agents and Landlords can pick the cream of the crop leaving the vulnerable lower income tenants not being picked upon to have the house.
Disgraceful these charges to Landlords which only impact on the lower tenants even more.
And that drivel from Shelter woman the other night about Section 21's. I've issued about 5 in last 6 years and only cause of benefit caps and rent arrears. Is that my no fault eviction is it? Concentrate on why doing the section 21's.
Don't just listen to the judge and the tenant. Ask the person that issued the section 21 WHY?

CrocadileBoy

12:21 PM, 29th September 2018
About 3 weeks ago

Rents have risen sharply over the last few years where I let, however this has slowed. I doubt it’s Brexit related as no main party seems intent on curbing migration. I’ve been increasing my rents as a result and clearly writing to tenants explaining S24 is the main reason. Those I know with one or two properties are finally waking up to this disasterous policy when asking accountants to prepare the tax returns, so expect more rises to come.

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