The latest ARLA (Association of Rental Letting Agents) Propertymark report has revealed that the number of available properties to rent in London fell in January to 46 per cent below the nation’s average.
As landlords are increasingly priced out of London, tenants are discovering they are up against tough competition for property rentals. In January 2018, London letting agents were on average managing 99 properties, which is particularly low when compared to the national average of 184.
The capital was the smallest region for supply again in December, with the average management of 130 properties compared to an average of 200 across the nation. The number of rental properties fell by 8 per cent between December and January, as the amount of prospective tenants registering to find a new rental home rose by 18 per cent. This is contributing to a lasting squeeze on the quantity of rental properties available to tenants, which is further piling the pressure on the price of renting.
ARLA Propertymark Chief Executive, David Cox, has commented that the London property rental market should be thriving, as the city is the national hub for culture and business, attracting a big inflow of new residents every year. Recent research has indicated that many landlords in areas with high property prices such as the South East and London yield small margins, and they have simply been forced to sell up. As the reality of higher expenses kicks in, the numbers will only increase.
The prospect of becoming a landlord is starting to become less justifiable, as budding buy-to-let investors are inhibited by increased taxes and further complicated legislation. The high property prices in the capital are making it increasingly hard for landlords to get by. The buy-to-let market has experienced sweeping reforms during the past two years, with landlords suffering a 3 per cent surcharge on stamp duty for new buy-to-let properties. The additional loss of the beneficial tax relief on mortgage interest as well as a crackdown from the Bank of England, has made it much more difficult to obtain a buy-to-let mortgage.
The report also discovered that around a fifth of tenants had been informed by their landlord that they would be paying more rent from January. The sheer volume of tenants is increasing as the prospect of buying a property is moving further out of reach, delivering another blow to renters.
Experts have warned of a buy-to-let crunch as landlords are selling off unprofitable properties and increasing rent, signalling a tough time ahead for the rental market. Mr Cox also emphasised the fact that as taxes continue to rise, limited housing stock will force good, established landlords out of the rental market, and deter prospective landlords from entering the sector.
Government policies intended to help tenants now appear to have had the opposite effect, as landlords move away from hiring professional agents. This will put tenants at increased risk of renting from novice landlords with no experience, or being duped by rogue landlords. Until the prospect of investment in the buy-to-let sector becomes more attractive for potential landlords, and with declining levels of housing stock available to rent, tenants will continue to feel the sting.
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