Posts with tag: rental supply

New prospective tenants and rental supply highest on record for June 2020

Published On: July 31, 2020 at 8:16 am

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New prospective tenants

According to ARLA Propertymark’s latest private rental sector (PRS) report, the number of new prospective tenants continued to rise in June.

This report, carried out by Opinium Research, involved an online survey of 210 ARLA Propertymark members that took place from 3rd to 20th July 2020. The results revealed an average of 79 new tenants registered per branch, compared to May’s average of 70.

Comparing year-on-year results since records began in 2015, this figure is the highest recorded for the month of June. The previous record was 71 in June 2019.

However, ARLA Propertymark does highlight that this is still down on pre-lockdown figures, with an average of 82 new tenants registered per branch in February 2020.

This report also shows that the number of rental properties on the market during June increased. Reaching another record high, there was an average of 200 properties managed per letting agent branch.

ARLA Propertymark comments that “this is down slightly from 208 in May, but still sets the market up for an active summer compared to the usual seasonal lull.”

Regionally, the highest number of properties being managed was in Yorkshire & Humberside, at an average of 264 per branch. Wales had the lowest average, at 104 per branch.

The number of rent price increases also grew in June. 29% of agents witnessed landlords increasing rents, compared to 14% in May. However, this remains the lowest number of rent price increases for the month since June 2016 (see Figure 1, below).

New prospective tenants
Figure 1: Average number of tenants experiencing rent hikes in June year-on-year

Average void period lengths decreased from five weeks in May to four weeks in June. Despite this decrease, this figure remains the longest average on record for void periods between tenancies in the month of June. 

Phil Keddie, President of ARLA Propertymark, comments: “Our latest figures show that the rental market is continuing to pick up following the COVID-19 lockdown.

“The record-breaking supply of rental stock and demand from tenants for this time of year paints an optimistic picture for the summer months, indicating that the market will be more active than the usual seasonal lull. 

“As the market continues to recover from the pandemic, it’s essential that everyone continues to keep up with their rent in order to sustain the market and help boost the economy during these uncertain times.”

Government should listen to suggestions of how to halt decline in rental housing

Published On: February 18, 2020 at 9:19 am

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rental housing supply

The decline in the supply of rental housing remains an issue in the UK, and landlords say the Chancellor needs to use his first Budget to take immediate action.

More properties are being sold by landlords than purchased, and others are making the decision to switch to short-term holiday lets for tax reasons. Therefore, unless action is taken, tenants are going to find it increasingly hard to find the home they want.

Investment in new rental properties has been slowed by the introduction of measures such as the 2016 3% Stamp Duty levy, knocking the confidence of landlords across the country.

The drain in rental accommodation is only made worse by an incentivisation from the tax system for landlords to switch their properties to short-term lets. As a result, ARLA Propertymark is warning that almost half a million homes could be made unavailable for tents in need of long-term homes to rent.

In their submission for the Budget, the Residential Landlords Association (RLA) and the National Landlords Association (NLA) argue that the tax system entirely contradicts the Government’s housing objectives.

The RLA and the NLA are calling for a fundamental review of the way rented housing is taxed to ensure that tax policy supports, rather than contradicts, government objectives. Their proposal is for the Stamp Duty levy to be dropped where landlords add to the net supply of housing through developing new properties. This includes bringing empty homes back into use or converting large properties into smaller, more affordable units of accommodation.

The associations also propose that tenants are supported into homeownership by introducing a Capital Gains Tax exemption for when landlords sell a property to a sitting tenant.

In addition, they are calling for tax relief for landlords investing in measures to improve the energy efficiency of a rented property or those who let adapted properties long-term to tenants with accessibility needs.

David Smith, Policy Director for the RLA, comments: “The tax system for rented housing is failing. It encourages the provision of holiday homes over long-term properties to rent, it deters investment in new housing and provides no support to those wanting to make energy efficiency improvements. 

“For the sake of those living in rented housing or who are looking for accommodation, Ministers need to use the Budget to urgently change course to ensure that their tax policies are positively aligned with their wider housing objectives to encourage good landlords to provide long-term affordable housing.”

Chris Norris, Director of Policy and Practice at the NLA, said: “The tax system with which landlords must contend is no-longer fit for purpose. HM Treasury has constructed a series of barriers to investment, which make running an efficient and successful lettings business borderline impossible.

“As he prepares his first Budget, we hope that the Chancellor will take the opportunity to use taxation to encourage investment in new and existing homes alike. Mr Sunak must recognise that housing costs can only be reduced by making it easier, not harder, to provide good quality rented homes.  

“The emphasis must be on finding solutions and encouraging investment across tenures amongst a diverse range of providers.”

Number of tenants negotiating rent reductions reaches all time low

Published On: January 29, 2020 at 9:58 am

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tenants negotiating rent reductions

A recent survey from ARLA Propertymark highlights that the number of tenants negotiating a rent reduction fell in December 2019.

It went from an already low 1.6% in November to 1.1%, making it the lowest figure since records began in January 2015.

It has also been noted that the number of agents witnessing rent increases remained at 32% in December. However, year-on-year results show that this is still a massive increase on December 2017 and 2018, as shown by this chart from ARLA:

Average number of tenants experiencing rent hikes in December year-on-year
Source: ARLA Propertymark

Demand from tenants

As well as a slight dip in negotiations, demand from prospective tenants fell last month. ARLA Propertymark recorded 56 prospective tenants registering per member branch in November, down from 67 in November.

Demand from prospective tenants has also fallen for member branches for the third consecutive month.

Supply of rental stock

Looking at available stock on the market, these results are more positive. The number of properties managed per branch rose last month from 203 to 206.

Year-on-year supply is also up from 200 in December 2017 and 193 in December 2018.

David Cox, ARLA Propertymark Chief Executive, has commented: “Since the tenant fees ban came into effect, our data shows that rents reached an all-time high last year.

“While we have seen a slight drop in the number of agents witnessing landlords increasing rents since then, overall rents remain high and now it seems that tenants are finding it harder than ever to negotiate a reduction in rent. 

“As rents continue to rise, tenants will find it even more difficult to find suitable accommodation. Now that we have a new government in place, it’s important that long-overdue legislative changes are implemented to make the market attractive again for both tenants and landlords.”

Rental supply crisis warning comes as RICS survey shows sharp decline in landlord instructions

Published On: December 13, 2019 at 10:41 am

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Rental supply crisis

A crisis may be on the horizon for the private rental market, as new figures show a sharp drop in supply over the last year.

The latest Residential Market Survey by the Royal Institution for Chartered Surveyors has been released. It shows a net balance of -29% of surveyors reporting a fall in landlord instructions. This is twice the negative rating that was reported in November 2018.

The report on the survey points out that market activity has turned stagnant ahead of the General Election. Its highlights also include:

  • Buyer enquiries and new instructions continue to fall, although the pace of decline eases 
  • Near term sales expectations turn marginally positive for the coming three months 
  • Respondents anticipate prices will return to growth over the next twelve months 

With tenant demand continuing to increase, RICS predicts that this will lead to rent increases of around 2% over the next year and around 3% a year over the next five years.

David Smith, Policy Director for the Residential Landlords Association, has responded: “If the decline in the supply of new homes to rent continues to fall whilst demand is still rising, this is going to lead to a crisis in some areas as tenants desperately search for somewhere to live. 

“This is all the result of increased taxation and other measures over the last three years and the result has been highly predictable as we said it would be.

“The new government needs to urgently address the problem and make changes in the forthcoming budget to relieve the pressure on landlords and encourage new investment to meet the demand.”

Tenant Demand Falls to Two-Year Low, Reports ARLA

Published On: January 30, 2017 at 9:28 am

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Last month, letting agents recorded the lowest level of tenant demand for two years, according to the latest report from the Association of Residential Letting Agents (ARLA).

Tenant demand

Tenant Demand Falls to Two-Year Low, Reports ARLA

Tenant Demand Falls to Two-Year Low, Reports ARLA

In its December Private Rental Sector report, ARLA found that just 26 prospective tenants were registered per member branch last month. This is the lowest level of tenant demand since records began in January 2015, and is down by 19% on the 32 tenants registered in November 2016.

However, the drop in tenant demand is in line with seasonal expectations. In December 2015, 29 prospective tenants were registered per branch, a figure that was down by 15% on the previous month.

Supply of rental stock

The number of rental properties managed per member branch rose from 185 in November last year to 188 in December. While supply is still very low, this figure indicates a broadly positive picture for tenants in the short-term, believes ARLA.

Following last year’s tax hikes for landlords, including the Stamp Duty surcharge and changes to Capital Gains Tax, almost half (46%) of letting agents expect to see rental supply decline this year.

Rent prices 

The amount of letting agents witnessing rent increases for tenants grew by three percentage points in December, to 19%.

In December the previous year, the number of rent rises fell month-on-month, from 23% in November 2015 to a similar 18%.

The Managing Director of ARLA, David Cox, comments on the findings: “Although December’s figures could indicate a bright future for renters, with the Government’s impending ban on letting agent fees, the future is actually rather bleak for the UK’s renters.

“Although we saw demand fall and supply rise slightly last month, these are in line with seasonal expectations and is what we expect to see in December. If the Government goes ahead with an outright ban on fees, tenants will unfortunately be the ultimate victims, as costs are recouped for the vital services fees cover.”

Landlords, have you witnessed a decrease in tenant demand over the past month?

Rental Housing Supply Rises to 18-Month High

Published On: October 24, 2016 at 9:13 am

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Rental housing supply rose to an 18-month high in September, according to the latest study by the Association of Residential Letting Agents (ARLA).

Rental housing supply

In September, letting agents managed an average of 193 properties per branch, up from 183 in August and the highest level recorded since April 2015, when there were also 193 rental properties registered per branch.

Rental Housing Supply Rises to 18-Month High

Rental Housing Supply Rises to 18-Month High

Rental housing supply had dropped to lows of 171 so far this year. Therefore, the jump in September paints a positive picture for tenants, amid industry-wide expectations of post-Brexit uncertainty.

Demand for rental property

Demand for rental property also grew in September, with 40 prospective tenants registered per letting agent branch, compared with 37 in the previous month.

In line with expectations, demand for rental property has been steadily increasing since the start of the year and is now at the highest level since February 2015, when there were also 40 hopeful tenants registered per branch.

Rent price growth

The amount of letting agents recording rent price growth is at the lowest level so far this year, with just 24% of agents reporting increases for tenants.

This is down by 3% on August, when 27% of agents saw rent rises, and 8% down on this year’s high of 32% in March.

The Managing Director of ARLA, David Cox, comments on the figures: “This month’s findings paint a really positive picture for renters. Although demand is rising, we’ve seen this happen gradually over the course of the year, and would expect it to slow again in line with seasonal trends over the next few months.

“On the other hand, the supply of rental stock has risen astronomically, which suggests it’s not quite right that landlords are pulling out of the market as a result of Brexit. This is supported in our findings, which reveal the number of landlords selling their buy-to-let properties hasn’t changed since April, when three landlords were selling up per branch.”

He continues: “It’s good to see less landlords hiking rents this month, but 24% is still too high. The cost of renting is already high in many parts of the country, and until the Government converts its pledges and promises into bricks and mortar, we won’t see renters reach a position where they’re able to save to get on the housing ladder. It will be interesting to see how this is tackled in the upcoming Autumn Statement.”

Tenants may be disappointed to learn that the Government’s Help to Buy scheme will be scrapped in December this year.

However, the new Housing Minister, Gavin Barwell, has spoken out in support of the private rental sector, pledging to make renting more affordable and stable for the nation’s tenants.