The number of rental properties on letting agents’ books has fallen to the lowest level for more than a year. Surprisingly demand is also down.
Stock fell sharply in March to its lowest level since the beginning of 2015, according to the Association of Residential Letting Agents (ARLA). Demand also dropped with ARLA agents reporting an average of 33 tenants registered per branch which was down from 37 in February. In March last year, the figure stood at an average of 36.
In March 2015, each branch managed an average of 192 properties but 12 months later the figure was just 169, which is the lowest level since records were first kept in January last year. The worst hit area was London with 122 properties per branch on average, while Scotland fared rather better with 273 properties.
In some senses we might expect the situation to be the other way around, with London having plenty of rental properties because of high demand. Prohibitive property prices mean many people cannot afford to buy while the Capital city and its commuter belt attract millions of workers and students.
Part of the problem could be the introduction of new rules and regulations in the past few months, including the changes to stamp duty which came into effect at the start of the new tax year in April. About two-thirds of ARLA agents predicted that a percentage of buy-to-let landlords would give up their business because the stamp duty would add thousands to the price of a property.
So with the fall in rental housing stock, it looks as though they may have been correct. Other landlords have had to increase rents to cover the increased stamp duty, with further rises not being ruled out. New stock may not be added because the tax will deter buy-to-let investors in the future.
At a time when the Government is keen to have a larger supply of better quality rental homes, it seems as though the politicians may have scored an own goal with the changes to regulations. Instead of encouraging landlords, they seem to be frightening them away.
With no sign of property prices easing, it means that even more workers will find themselves unable to afford to buy in popular regions of the UK.
The country needs a larger stock of rental properties to cope with demand, especially if fewer people will be investing in the buy-to-let market from now on.