The supply of rental housing stock on letting agents’ books fell in March, to the lowest level since the start of last year, according to the Association of Residential Letting Agents (ARLA) March Private Rental Sector (PRS) report.
Demand also dropped in March; ARLA agents had 33 prospective tenants registered per branch on average, down 11% from 37 in February. This stands below the figure recorded in March last year – when agents registered 36 on average.
Supply has also fallen year on year. In March 2015, the average number of properties managed per branch was 192, which is down 12% this year with just 169 rental properties managed per branch – the lowest level since records began in January 2015.
It’s a brighter picture in Scotland, where agents had on average 273 properties on their books, and Yorkshire and Humberside, where 207 properties were recorded on average per branch. In London however, agents had just 122 properties on their books per branch.
In March, two thirds (65%) of ARLA agents predicted that current and prospective BTL landlords will walk away from the market following the April stamp duty changes, causing a decrease in the supply of rental properties. Rent costs rose in March for a third of tenants (32%), and three in five (61%) ARLA members fear they will increase further as a result of the changes – a growing sentiment since last month, when 57% of agents agreed on this.
ARLA managing director David Cox said: “We don’t expect falling supply to stop here – the recent stamp duty changes are very likely to cause supply to decrease even further, as landlords withdraw from the market.
“Not only do our agents predict that rent costs will increase further, but rental homes may also face a decline in quality over time, as landlords struggle to keep up with maintenance costs alongside the higher stamp duty charge. Whilst landlords adjust to the increase in costs we can expect to see one of three outcomes prevailing in the buy to let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage.”