A survey of landlord trends has confirmed that significantly less property is coming onto the market, putting increased strain on the private rental sector (PRS). For tenants, this is good news, as rental lengths are naturally increasing, with low evictions and arrears.
The Government’s measures to reduce buy-to-let stock seem unlikely to help tenants in the years to come, as reduced numbers of rental properties will result in some tenants with nowhere to live. Some landlords are still buying properties, but the number has significantly reduced. The question is how much influence is Government pressure having on landlords?
In reality, there is much less rental stock appearing on the market, as well as slightly less tenant demand than in past years. Due to wages and inflation catching up with each other, tenants typically do not have the extra cash required to pay higher rents. In London, there have even been some slight falls in rent.
Across the country, when analysing rental performances, the lowest rents are typically in the North West, at an average of £597, compared with £630 in the North East. Unsurprisingly, the highest rents were in the South East, with an average of £1046, compared with rents in London of £1431. With the exception of the highest rents of London and the South East, rental figures have been fairly stable in the last 10 years.
Inflation has remained moderately static at the end of 2017, with some reasonably small rent rises, at around £25 per month. Most are predicting a rise in house and flat rental prices this year, a change from the recent static rent of past predictions. However, rent prices for students, housing benefit tenants and those looking for single rooms are predicted to stay fairly stable. The demand for rental properties is starting to show signs of falling. There is, however, a continuing shortage of three-bed terrace or semi-detached properties, as well as two-bed properties, despite the fact that shortages fell at the end of 2017. Tenant choice for one and two bedroom flats remains better, with experts predicting that tenant demand will likely remain the same, with the major supply versus demand pressure being put on houses.
Trends indicate that tenants are also remaining in their rental properties for longer, with 52 per cent preferring a longer tenancy of 13 – 18 months, and 23 per cent opting for a tenancy of 19 – 24 months.
Despite the festive season and the financial strains it brings, tenant evictions and arrears fell at the end of 2017, with almost 90 per cent of letting agents reporting no or just one eviction carried out. This could be attributed to efficient and effective referencing processes. When tenants have the option of longer term tenancies, but are not taking them up, and are instead choosing to move on, the question arises as to whether mandatory longer tenancies are necessary.
When asked about the proposed Government legislation concerning the safety of rental properties, and whether tenants would be inclined to take landlords to court or move when agreements ended, experts suggested that less than 10 per cent would be likely to take any action.
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