Tenant demand accelerating and outstripping falling landlord supply

Tenant demand accelerating and outstripping falling landlord supply

13:25 PM, 9th September 2021, About 2 months ago 9

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Tenant demand for homes to rent accelerated in August, with a net balance of +66% reporting a pick-up in enquires (up from the +58% in the previous month). However, a continuing decline in landlord instructions fuelled expectations among survey respondents (net balance of +64%) that rents will go up over the next three months given this imbalance between supply and demand, according to the latest findings of the RICS UK Residential Market Survey.

As the government’s stamp duty holiday is tapered out, property agents report another fall in new homes being listed on the market with sales also heading in the same direction in August.

New buyer enquiries fell for the second month in a row, with a net balance of -14% of respondents saying they had seen even fewer house hunters (following a -9% reading in July). Agreed sales also declined at the same time – with a net balance of -18% reporting a fall.

Looking forward, respondents were more optimistic about the market’s prospects, with sales over the next three months expected to stabilise (net balance of +4%) before returning to modest growth (+7% net balance) when looking over the next year. On a regional level, the responses show sales expectations for the year ahead are most positive across London, Northern Ireland and the South East of England.

New listings were down again with a net balance of -37% reporting yet another fall with eight of the last nine months seeing new listings in negative territory. It’s not much surprise that stock levels on agent’s books have therefore dropped from an average of 42 homes per branch at the start of 2021, to stand at 38 in August, getting close to near record lows.

As a result of demand outpacing supply, respondents continued to report strong rates of house price inflation – with a net balance of +73% saying they’d seen prices increase since the previous month’s survey. Looking to the year ahead, a net balance of +66% said they don’t expect prices to continue rising at a national level, the same reading reported in July.

Tarrant Parsons, RICS Economist, said:

“The latest survey evidence inevitably points to market activity taking a breather following the flurry of sales seen ahead of the tapered Stamp Duty holiday withdrawal. That said, while momentum has eased relative to an exceptionally strong stretch earlier in the year, there are still many factors likely to drive a solid market going forward.

“Nevertheless, given the real shortfall in new listings becoming available of late, there remains stong competition amongst buyers and this is maintaining a significant degree of upward pressure on house prices. What’s more, prices are expected to continue to climb higher over the year to come, albeit the pace of increase is likely to subside somewhat in the months ahead.”

Commenting on the effects of the stamp duty holiday, Bradley Tully, Senior Public Affairs Officer at RICS said:

“RICS was supportive of the stamp duty holiday as a response to unique market circumstances last year during the height of the pandemic, though the scope of the holiday was arguably broader than we had anticipated and it should have been allowed to expire as originally intended.

“Over the long-term, RICS believes that an overhaul of stamp duty land tax should ultimately be delivered. Indeed, earlier this year the House of Commons Treasury Select Committee recommended that reforming stamp duty should be a priority for the government in their report, ‘Tax After Coronavirus’.

“We would urge the Government to undertake a full-scale review of the current stamp duty land tax system to assess future ideal outcomes in terms of factors such as revenue generation and housing market fluidity. Housing affordability for first-time buyers and key workers should remain a crucial factor when considering access to the market too”.

 



Comments

by Mark Alexander

16:54 PM, 9th September 2021, About 2 months ago

Over regulation and over taxing the PRS has caused this problem. The Government is now reaping the seeds it has been sowing since 2015. We warned them this would happen!

Government needs to pay more attention to us and less attention to self-serving lobbyists like Shelter and Generation Rent. They have no reason to exist if the housing crisis is solved. Why can’t the Government see that?

by Freda Blogs

17:09 PM, 9th September 2021, About 2 months ago

Spot on, couldn’t agree more. I’m selling up.

by Beaver

17:10 PM, 9th September 2021, About 2 months ago

So on "As a result of demand outpacing supply, respondents continued to report strong rates of house price inflation – with a net balance of +73% saying they’d seen prices increase since the previous month’s survey."

So stopping landlords from being able to deduct their financing costs from rent, a measure that was originally supposed to curb another housing bubble, does not appear to work? And in fact this and another bunch of punitive measures designed to punish landlords are just resulting in a lack of supply?

On "Housing affordability for first-time buyers and key workers should remain a crucial factor when considering access to the market too”. So some of those "key workers" (presumably working in the public sector) are being negatively affected by this?

The burden of regulation that buy and large punishes good landlords with 1-2 properties and aren't incorporated and does little to correct the behaviour of the rogues could well be a factor here couldn't it?

And what about climate change? Even if you weren't minded to let landlords deduct their finance costs, even though other businesses can, would it make sense perhaps to let landlords do it if their properties were at Band C or above? And if you really wanted to increase the supply of high quality housing with minimal environmental impact would it make sense to allow personal pension funds to invest in housing that reached band C or above?

Surely you need a boom in good quality environmentally-friendly housing and a boom in good quality landlords. If that isn't going to happen under a conservative government when would it happen?

Or is all that stuff about the environment that comes out of politician's mouths as David Attenborough trots up the stairs to have dinner with them just a lot of hot air, like the hot air coming out of our gas condensing boilers because it doesn't make financial sense to replace them with anything else.

by Trisha

19:00 PM, 9th September 2021, About 2 months ago

Oh well……we warned this would happen, the direct result of successive punitive measures against the PRS and double standard rules which don’t apply to the social sector.
1. Wear n tear allowance scrapped.
2. Stamp duty for BTLs.
3. 100% council tax payable on void properties from day 1 (not even a 25% discount).
4. Reduction in deposit amounts ( 5 weeks is woefully inadequate).
5. Unable to take pet deposits.
6. Council tax single banding for HMOs.
7. Section 24 tax, no other business is unable to offset their costs.
8. Numerous unfair decisions against landlords made by the deposit schemes, whilst landlords are unable to have a rogue tenant database, only a rogue landlord list.
9. Scrapping of fees for application and referencing which has led to higher costs from agents.
10. The lack of help with COVID and the court system being unfit for purpose, with a further insult of section 21 being scrapped!
Every week I am contacted by people in a desperate situation due to their landlord selling up. I feel genuinely sorry for them. I have been there myself. Unfortunately, I’m just a small time landlord with a handful of properties. I refused to buy anymore after stamp duty was introduced like many others. The government have poisoned the sector in the middle of a housing crisis!

by Mick Roberts

9:06 AM, 10th September 2021, About 2 months ago

Reply to the comment left by Trisha at 09/09/2021 - 19:00
Great words there Trisha, Which I'm gonna' add to my rent increases & text below to my tenants about asking them if I can sell:

I've not finished this, only rough draft.

Please ring me about this text and read to the end before u panic.

We'd like to sell your house within 10 years for the reasons below. We can sell it u and pay your deposit for u, if u r able to buy it. Sell it to someone u know who would keep u in. We have people who may buy & keep u in.

Lot of Landlords give tenants 2 months notice. We recognise this is your home, and would never contemplate selling on u if you've done nothing wrong, however the Council's and Govt are making it really difficult for the good Landlords-All to get back at the bad Landlords.

We are only in this position cause the Council's and Govt are bringing that many rules in retrospectively, they making it extremely hard for good landlord that's abiding by the rules and is getting older, to carry on.
We doing 4 times the amount of admin, paying out thousands in unnecessary costs-Nothing which makes your home better.

U should all really be writing and meeting your MP and Councillors and Govt and Council and telling em what they are doing to people who didn't have a problem before.

The latest rule they are now proposing to bring in in 2025 is EPC to a C. I've already got the Combi boiler, UPVC etc., so it's external wall insulation. Approximately £10,000 each house, but they not bringing it in for Council houses or Owner houses-Only to Private Landlords.

I never thought we'd be in the trap we in now where Councils and Govt have made it that bad for Landlords, that it's made it extremely hard for Benefit tenants to move house.
Years ago, u had a choice to move, and then I'd have sold your house as u moved on. We all in a trap where u can't move now if u want to. Govt and Councils has done this to u. Landlords packing up in their droves due to Licensing and Universal Credit.
It's also the bad tenants some of these rules are being bought in for, which makes it unfair for u good ones.

I used to be able to give u keys, service your boiler and u tell me when something needs doing. I'm now doing courses at 4am just to keep u in your home. And many of u aware, I don't want the houses any more, only keeping them to keep u in your home.

U can buy it now if u or your buyer can arrange it. Also happy to wait for u up to 10 years. I'll pay your 5% deposit if u can buy it.

Please work with me and let's find a Landlord that is younger and not weary of the all the latest rules, who's happy to keep u in for 10+ years. I'd get a lot more selling it empty, but I'm mindful that it's been your home for years, so am prepared to lose £10,000 to sell to discount Landlord to keep u in your home.

I may have a few people now who wish to buy and keep u in if u wish to go ahead now.

Some of u have been with me 24 years and I don't take this decision lightly.
Some of you's kids are also getting older and your Housing Benefit towards the rent will drop massively when your kids are 18 or leave. I used to have affordable flats for u to move into. Now the people aren't moving from my flats any more.

Govt & Councils are making far too many retrospective changes when the tenant has already lived there years & the Landlord bought the house years ago. If people have not had a problem for years, Govt & Councils should be rewarding them and lower costs, not penalising them and higher costs.

U can start to stop this spiralling lack of supply of houses to yourself by emailing the below and putting your name address phone number at top of email.

Councillor who responsible for Licensing fee increase
linda.woodings@nottinghamcity.gov.uk

Nottm Council Labour boss who supports Licensing
david.mellen@nottinghamcity.gov.uk

Nottingham North MP
alex.norris.mp@parliament.uk

Below is other reasons which are forcing my hand:

We now have to do Fitness tests on new rentals £150 each house.
Electrical Installation Condition reports organisation & implementation £300+ each house.
Selective Licensing £890 just for one house.
Legionnaires checks £70 each house.
EPC’s £80 each house.
EPC’s soon to a C each house approx £10,000
Data protection checks £40.
Carbon Monoxide detectors & smoke detectors, when wired, £300 each house.
Getting registered with Information Commission officer £40.
Floorplans, Inventories £90 each house.
Landlord has to criminal check himself & has to prove he has Right to live in UK
Increased staffing admin behind the scenes.
As you’ve seen, checks/inspections on your houses now with smoke alarms-Should be much more detailed checks.
Consultant & Legal fees to keep pace with legislation & staff training.
Letting Agent costs for new tenancies & house swaps £70pm each house.
All the above is extra costs we din’t have when many of u moved in.

Below are other reasons why Landlords are packing up & why u can’t get anywhere any more, & remaining Landlords charging what rent they like:

1. Wear n tear allowance scrapped.
2. Stamp duty for BTLs.
3. 100% council tax payable on void properties from day 1 (not even a 25% discount).
4. Reduction in deposit amounts ( 5 weeks is woefully inadequate).
5. Unable to take pet deposits.
6. Council tax single banding for HMOs.
7. Section 24 tax, no other business is unable to offset their costs.
8. Numerous unfair decisions against landlords made by the deposit schemes, whilst landlords are unable to have a rogue tenant database, only a rogue landlord list.
9. Scrapping of fees for application and referencing which has led to higher costs from agents.
10. The lack of help with COVID and the court system being unfit for purpose, with a further insult of section 21 being scrapped!

by Chris @ Possession Friend

11:05 AM, 10th September 2021, About 2 months ago

Rogue Tenant support groups are helping 5% of Freeloaders which is negatively impacting the majority of honest tenants.
Businesses have to adapt to the risks of the environment which has been negatively impacted as described above.

by Mick Roberts

11:38 AM, 10th September 2021, About 2 months ago

Reply to the comment left by Chris @ Possession Friend at 10/09/2021 - 11:05That about exactly sums it up Chris what u say here:
Rogue Tenant support groups are helping 5% of Freeloaders which is negatively impacting the majority of honest tenants.
The bad un's make life hard. Landlords then have to take action. Landlords then get slated. More Anti-Landlord rules bought in. The 95% good tenants end up paying more & then having worse time.
My lot genuinely can't get anywhere any more. I can only speak for Nottingham which I know, & some may say Good on u Mick, tenants for life. But I am human & wish to slow down one day & less calls on holiday about a rent not gone in & door sticking. Years ago, they'd have had a choice to move up the road. If mine are paying £650 & up road is £800, mine ain't gonna' go. And if Landlord up road can get £800 from squeaky clean deposit paying working person & has 15 of them queuing, he ain't taking a Benefit tenant.

by Ian Simpson

7:27 AM, 11th September 2021, About 2 months ago

SAdly, we are not seeing this demand. The only tenants we can find in North Hampshire are all dope-smoking ~~~~ who stop paying rent after a couple of months, and we have had to REDUCE rents by 20% or more, just to fill rooms. I think a lot of our tenants were EAstern European and have now all gone home as a result of Brexit. I am trying to sell,m but just get a long series of time-wasters who have no intention of buying at a sensible value, and are just looking for a distressed sale.... will have to hold on... 'tis like a prison sentence...!!

by Hardworking Landlord

8:33 AM, 11th September 2021, About 2 months ago

Reply to the comment left by Mark Alexander at 09/09/2021 - 16:54
I think it’s all going to plan for the government as they remove the smaller landlord and replace them with the likes of Lloyds Bank etc. No doubt the EPC regs will aid this too


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