A worrying new investigation by the Association of Residential Letting Agents suggests that the supply of rental accommodation is at its lowest level since records began.
What’s more, demand for accommodation was up slightly in January.
Decline
Supply of rental accommodation slips further
After months of steady decline, January saw the number of properties registered per letting agent branch slip by 5%. The total currently stands at 172 properties, down by 10 on December 2015.
However, renters north of the border have much more choice, with 280 properties registered per member branch in Scotland. In London however, demand for property is being driven up by lack of supply, with just 116 properties available per registered branch.
Rising demand
Demand for rental property rose in January, following a lull in December. One average, 31 would-be tenants registered per member branch during the last month. This is still lower than in January 2015, when 38 tenants were registered per branch.
Growing demand was underlined by the number of agents reporting rent hikes in January. 30% reported a rise in rental values, the largest since September 2015.
‘Supply of housing continues to be a problem and tenants bear the brunt of this with more people competing for properties at higher prices,’ noted David Cox, managing director of ARLA. ‘The majority of tenants find that it is impossible to save very much at the end of the month to put towards buying their own home. Our recent Cost of Renting report found that a fifth of those renting in the UK do not expect to ever be able to afford to buy a home and unless we act soon to build more properties, this number will only get higher,’ he continued.[1]
Reforms
The upcoming stamp duty changes on buy-to-let and second residential homes is causing concern in the sector. 63% of ARLA members believe the Chancellor’s reforms will drive landlords out of the market. This in turn will lesson supply still further, with 58% of ARLA members believing that reforms will also push up rental costs.
Mr Cox went on to say, ‘a few weeks into the new-year and the April deadline for the stamp duty surcharge is looming and interest from buyers looking to invest in buy-to-let properties and beat the deadline is ramping up. The final details of the new tax will be revealed at the Budget in March but we are not expecting to see the Government back down on this policy.’[1]
‘The findings from our members echo our concerns that efforts to penalise buy-to-let will ultimately impact those entering and currently in the rental market, as by increasing rents landlords will seek to recoup their costs. Rent costs are already rising exponentially and tenants are feeling the strain of a crowded marketplace. We just need more houses; it’s a simple as that,’ he concluded. [1]
[1] http://www.propertyreporter.co.uk/landlords/where-have-all-the-rental-properties-gone.html