Concerning new figures have suggested that tenants are looking at higher rents as the supply of rental property continues to drop.
The Association of Residential Letting Agents (ARLA) has reported that the total number of properties registered per letting agent has slipped by 5% year-on-year to April. This in turn means that renters are staring at harsher times, following on from the Stamp Duty increases, with landlords looking to recoup losses through increased rents.
Rental property problems
Consecutive years of failing to deliver sufficient rental property to match demand has pushed up rents. Now, Chancellor Osborne’s latest housing policy changes are serving to drive the problem further.
A further decline in the number of rental properties is expected on the back of increased Stamp Duty charges and lower mortgage tax relief for buy-to-let landlords. Many landlords are expected to look to sell their property as a result of the changes, exacerbating the problem and driving rental values up in the future.
Rental property shortage heightened by tax changes
Rise and fall
Further data from the ARLA report indicates that despite an 8% month-on-month rise in the volume of properties per branch, the number of homes managed on average is down from 193 to 183 year-on-year. The surge to beat the Stamp Duty reforms was a key contributor in the rise recorded in the first quarter of 2016.
David Cox, managing director of ARLA, said, ‘it’s likely that this increase in supply is only temporary. At the end of April we saw a flurry of landlords seizing the last few moments before the Stamp Duty rise to complete sales, triggering an increase in the supply of empty rental homes to be filled this month.’[1]
‘However, we expect that fewer investors will be taking on buy-to-let properties over the next six months, following the price hikes, meaning that once these properties are filled we’ll see supply nose-dive once again,’ Cox added.[2]
[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/tenants-face-rent-rises-as-supply-of-rental-properties-falls