The supply of rental accommodation is the lowest in the past year, while demand for rented accommodation is still rising, according to an industry body.
The Association of Residential Letting Agents (ARLA) January Private Rental Sector (PRS) report found that the number of properties registered per letting agent branch dropped by 5% to 172 in January –10 fewer than in December.
Supply in Scotland stands above the national average, with 280 properties available per member branch, while the supply of rental properties in London is 59% less, with only 116 properties per branch. However, the capital has seen a slight increase in the number of properties available over the past month, rising from 108 in December 2015.
The ARLA report found that demand for rental accommodation picked up in January following a seasonal lull in December, with an average of 31 prospective tenants now registered per branch. However, it has not returned to the high levels reported in January and February last year, when there were 38 and 40 tenants registered per branch respectively.
In line with growing demand, the number of agents reporting rent hikes for tenants increased in January, with three in 10.
ARLA managing director David Cox said: “Supply of housing continues to be a problem and tenants bear the brunt of this with more people competing for properties at higher prices. The majority of tenants find that it is impossible to save very much at the end of the month to put towards buying their own home. Our recent Cost of Renting report found that a fifth of those renting in the UK do not expect to ever be able to afford to buy a home, and unless we act soon to build more properties, this number will only get higher.
Nearly two-thirds (63%) of ARLA members think the Chancellor’s stamp duty reforms for buy-to-let (BTL) properties will push landlords out of the market, which will in turn cause supply to drop further – and nearly six in ten (58%) believe the reforms will push up rent costs.
However, nearly half (47%) of ARLA agents reported that they have seen an uplift in interest from buyers looking to invest in BTL properties before the 1st April – a rise from 24% from last month.
“A few weeks into the new-year and the April deadline for the stamp duty surcharge is looming and interest from buyers looking to invest in buy-to-let properties and beat the deadline is ramping up. The final details of the new tax will be revealed at the Budget in March but we are not expecting to see the Government back down on this policy,” said Cox, “The findings from our members echo our concerns that efforts to penalise buy-to-let landlords will ultimately impact those entering and currently in the rental market, as by increasing rents landlords will seek to recoup their costs. Rent costs are already rising exponentially, and tenants are feeling the strain of a crowded marketplace. We just need more houses; it’s as simple as that.”
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