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Rents are expected to rise this year, according to the latest analysis. This is due to a number of factors including the ever-increasing problem of demand outstripping supply, plus the banning of letting agency fees. It is believed that many agents will pass these costs on to landlords who will, therefore, put up rents to cover them.

A report by ARLA Propertymark shows that about 59% of agents think rents will increase next year. Only 19% believe rent prices will actually fall. They also feel that the shortage of rental property stock will worsen, with 62% expecting the number of rental properties to fall in 2018. However, 53% believe the demand for properties to rent will increase. So they fear the situation will become even more acute. This is believed to be the biggest reason why they feel rents will be going up in 2018. Whilst some landlords are moving out of the industry or not investing in new stock because of the tax changes coming into place, other factors are also affecting the lack of supply. For instance, the new minimum standards for energy efficiency will start to have an effect this year. It is estimated that as many as 300,000 properties, which do not meet the minimum requirements of energy efficiency, will be taken off the market. Obviously, this will help drive rents up because the supply is even further diminished. It is a given that landlords will need to increase rents because of the loss of wear and tear allowances, tax increases, licensing, new HMO licensing requirements, and lower tax allowances. Unfortunately, this could lead to more evictions as tenants find they cannot afford to pay these increased rents.

On average, rents increased by 0.56% across the UK last year, with London commuter towns leading the way. According to Landbay’s rental price index data, tenants living in many popular commuter towns faced increased rents, along with increased train fares adding to their costs. The average rent in 17 of the 40 towns being monitored grew by £183 (1.68%) on average last year. Cambridge had the biggest rise in rents with an average increase of £228 – 2.06% – followed by Brighton at £202 – 1.58%.

Landbay says that this demand for accommodation by commuters working in London is putting up prices in many towns within the commuter belt. Conversely, rents in London dropped by 0.8% last year. Landbay CEO, John Goodall, felt the growth in rental prices is likely to accelerate this year too because of inflation, higher rail fares and the lack of a radical plan for houses to buy as well as purpose-built properties to rent.

ARLA Propertymark’s chief executive, David Cox, said that regulations are coming in which will have a more positive effect on the private rental sector. These include setting up special housing courts to speed up disputes, longer-term rental contracts and other regulations. Mr Cox felt there will be major changes in the letting industry in the next five years. Although it will be a difficult time for agents, he feels that it will lead to a stronger and more professional industry once these changes are implemented.

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