Rents will continue rising as landlords ‘withdraw’

Rents will continue rising as landlords ‘withdraw’

8:03 AM, 30th November 2022, About A year ago 16

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A lack of rental stock because landlords are leaving the PRS and continued tenant demand will continue pushing up rents, researchers reveal.

The data from TwentyEA also highlight that the average asking price for rent across the UK was sitting at £1,605 per month in Q3 2022.

That is 19% higher than in Q3 2019.

Stuart Ducker, the strategic solutions director of TwentyEA, said: “The challenges faced by the lettings sector are laid bare in the Q3 2022 numbers, compared with Q3 2019.

“Lack of supply is compounded on the demand side as tenants are undoubtedly deferring decisions to buy as a result of higher house prices, inflation and interest rates.”

‘As some landlords withdraw from the market’

He added: “In contrast to the owner-occupied sector, there is a marked supply and availability issue, as some landlords withdraw from the market, as tax changes put in place in 2019 have reduced incentives.

“Pressure on the supply and demand side means that this situation is unlikely to improve in the near term.”

Mr Ducker points outs that landlord incentives ‘have been dulled’ by legislative and tax changes, whilst the reduction in the buy-to-let mortgage products will restrict fresh investment.

He said: “Rising rent prices are likely to continue as higher interest rates and inflation may be passed on by landlords, whilst supply constraints and demand pressures continue to apply.”

Lets agreed and new instructions are down by 19% and 25%

The research from TwentyEA also reveals that lets agreed and new instructions are down by 19% and 25%, respectively in Q3 compared with the same period in 2019.

The downbeat performance of the sector is highlighted starkly in its ‘Regional and Major City’ tables.

Researchers say Edinburgh is a top performer for lets agreed at +37.8% compared to Q3 2019, albeit from a low volume of transactions, whilst all other locations have seen double-digit declines.

The largest decline can be seen in Plymouth (-37.4%), followed by Glasgow (-31.0%), Newcastle Upon Tyne (-29.8%) and Cardiff (-25.2%).

As of September 2022, all regions have settled at around 1.5 months of available stock from two months in September 2021.

Rental Lets Agreed by Regions & Major Cities Q3 2019 compared to Q3 2022

Major Cities Change UK Region Change
Edinburgh 37.8% East Midlands -12.3%
Nottingham -12.7% East if England -14.0%
Birmingham -14.7% Outer London -14.2%
Leeds -14.8% West Midlands -16.3%
Southampton -17.3% South East -16.7%
Peterborough -19.3% Yorkshire and The Humber -18.8%
Manchester -19.5% Inner London -20.0%
Inner London -20.0% North West -20.3%
Sheffield -20.1% Scotland -20.7%
Bristol -21.0% North East -23.0%
Norwich -22.9% South West -28.5%
Cardiff -25.2% Northern Ireland -29.9%
Newcastle Upon Tyne -29.8% Wales -31.8%
Glasgow -31.0%
Plymouth -37.4%

Source: TwentyEA Data, November 2022


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Comments

Chris @ Possession Friend

23:25 PM, 3rd December 2022, About A year ago

A link to TwentyEA's research would be helpful.

DavoLFCUbique

7:45 AM, 4th December 2022, About A year ago

I have held off.raising rents. My tenants are all decent I only have a handful of.properties. the changes though have made it unsustainable for the future. Therefore I have conciously held off so as not to spoilt their Xmas. The issue I have is I know this is going to hurt them at a time when costs have gone up. This will put a massive strain on at least two of the four. I really wish there was an alternative to raising rents. Having more tax to pay and the future with EPC's. Maintenance and repairs have gone through the roof.

Gromit

9:05 AM, 5th December 2022, About A year ago

Reply to the comment left by Mr.A at 03/12/2022 - 12:20The Govt have been told countless times what the outcome of their policies will be. But they just ignore us, they cannot say they haven't been warned!
I think they believe big business (aka big Tory donors) will fill the gap, but that's not happening quickly enough, and then only in city centres targeting young professionals.
The unconservative Conservative Party have sown the seeds of their own destruction and will out of power for a generation.

Reluctant Landlord

12:00 PM, 5th December 2022, About A year ago

Reply to the comment left by Adrian Anastas at 03/12/2022 - 09:25
Do you have properties in Birmingham?

Contended Ted

21:09 PM, 5th December 2022, About A year ago

Reply to the comment left by Mr.A at 03/12/2022 - 12:20
They don’t seem to want to get elected. Some of them are already making other plans.

Grumpy Doug

22:05 PM, 5th December 2022, About A year ago

Reply to the comment left by Gromit at 05/12/2022 - 09:05
So much noise about build to rent and I agree, I'm sure that the Tories believe that their corporate chums will fill the gap. However a cold hard look at the numbers prove that this will not happen for a very, very long time.
Currently there are 237,000 BTR units either completed, under construction or in planning. Given that the PRS is currently 4,300,000 that represents 5.5% (and some of those planned may never happen given the recent rise in construction costs). On current forecasts, BTR will account for no more than 8 to 10% of the whole sector by 2030 ... and let's not forget that most of it will be in major cities. Small towns will hardly see any.
So, when we follow in Ireland's footsteps, and the sector grinds to a painful halt, our politicians may have to grit their teeth, and do as the Irish are now doing and reversing many of their damaging policies. Just don't leave it too late chaps - the emergency accommodation bill will be painful.

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