Seasonal lull in BTL ahead of expected surge

A typical, seasonal lull occurred in the rental market during the last month, with the supply of properties falling alongside demand.

These were the findings of the latest report by ARLA, whose agents registered an average of 29 prospective new tenants in December. This was down on the 34 recorded in November, a fall of 15%.

Supply also dipped in the last month, with an average of 182 properties managed per branch, as opposed to 189 in the previous month. Potential renters in the capital however were not spoilt for choice, with an average of only 108 properties managed per branch, 43 less than the overall national average.

Rent relief

In addition to falling supply and demand, rents also slid in December, with the number of tenants experiencing rental increases dropping. Just 18% of ARLA letting agents reported an increase in rents, a drop of 5% since November. Additionally, this was the lowest total recorded in the whole of 2015.

‘As we’d expect in December, the UK saw a lull in activity, with people putting off any moves until January,’ noted David Cox, ARLA managing director. ‘It’s reassuring to see the number of agents reporting rent increases is still on the decline-some encouraging news for tenants as we start 2016’.[1]

A change is coming

Unsurprisingly, the views of ARLA members on the upcoming tax hikes mirror those of the wider sector. 62% believe that the changes will push up rents, while 65% believe the alterations will lead to some landlords leaving the sector, thus lowering supply still further.

The upcoming changes in legislation seem to be having an immediate impact on investors, with ARLA agents recording a 24% increase in investors looking to purchase before the changes come into play in April.

‘With supply, demand and the number of agents reporting rent increases all declining in December, this could well be the calm before the buy-to-let storm,’ Cox continued. ‘Buy-to-let landlords determined to complete purchases before the changes come into force in April are storming the UK housing market, meaning the lull we’d usually see is less significant.’[1]

‘Subsequently, after April, we’re very likely to see the number of buy-to-let properties on the market begin to decrease and this will most certainly have a detrimental effect on renters across the country,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/is-this-the-calm-before-the-buy-to-let-storm.html