Lack of rental properties leading to rising rents. Data from property portal, Rightmove, has shown a continuing trend in fewer numbers of property investors purchasing rental properties, which is leading to record-breaking rental prices, as well as a lack of available buy-to-let properties. This is leading to increased competition among prospective tenants who are searching for the right home. Figures produced by the online portal from October to December 2018 showed that listings for rental properties have dropped by 22 per cent in London over the last 12 months, and they fell by an average of 10 per cent in the rest of the UK.

According to the data published from Rightmove, the average asking rental price for a property outside of London in Q3 of 2018 exceeded £800, reaching £802 for the first time. Available rental stock numbers have simultaneously dropped by 8.7 per cent, and London saw a steeper fall of 19.4 per cent. A key factor in this lack of rental stock is the fall in approvals for buy-to-let mortgages, which are down 14 per cent compared to the previous year, and 53 per cent in comparison to three years previously. This period pre-dates extra surcharges in stamp duty on second homes, in addition to other tax measures against landlords.

Miles Shipside, Housing Market Analyst and Commercial Director at Rightmove, emphasised that currently, rental demand is exceeding supply in a large number of locations, especially in London. The exit of many landlords from the investor market has exacerbated the problem in the last few years. This is due to a number of different factors including extra legal obligations, increasingly stringent borrowing criteria and an onerous tax regime.

This has led to a lack of rental homes available for tenants, with properties being snapped up extremely quickly once they enter the market. Compared to this period last year, it takes four days less time for a rental property to become ‘let agreed’ in the capital, down to 37 days from 41. Most other regions across the UK have not yet seen the lack of available rental stock translate into shortened time to let. Rightmove data has shown that the 35 day national average of time to let has remained constant from the same period last year.

Mr Shipside went on to explain that despite some shortfall in rental property supply being met by housing from Build-to-Rent schemes within the next few years, it is likely that significant housing shortages will continue in areas with a large concentration of renters. Considering this backdrop, rents are likely to increase, and tenant demand should improve rental yields steadily.

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