Rental prices look set to increase in the coming months on the back of a growing supply-demand imbalance, the latest Private Rented Sector (PRS) report from the Association of Residential Letting Agents (ARLA) Propertymark suggests.
Fresh figures show that demand for rental accommodation rose by 31% between December and January 2017, while the number of available homes in the PRS increased by just 3%.
Letting agents report that a ‘seasonal lull’ was to blame for the shortage of rental accommodation available between December and January, although the report added that both demand and supply had increased sharply over the previous 12 months.
On an annual basis, the prospective number of tenants rose by 10% in January, with an average of 34 prospective renters registered at each ARLA approved letting agent, up from 31 in the same month last year.
Meanwhile, the volume of homes available on the market increased by 12% over the corresponding period, with an average of 193 per branch in January 2017, up from 173 a year earlier.
David Cox, chief executive at ARLA Propertymark, said: “As expected, the New Year brought with it a flurry of activity in the rental market. While supply of rental stock rose slightly, the number of prospective tenants increased by a much bigger margin.
“When supply and demand are out of kilter, as they have been for so long now, the market isn’t balanced and fair for tenants, and rent prices will just continue to rise.”
Almost a quarter - 23% - of agents surveyed witnessed rent hikes in January, but this was down from 30% in January 2016.
Cox warned that the government’s plans to implement an out-right ban on letting agent fees will make the situation worse for tenants.
He added: “The costs of the vital services letting agent fees cover will need to be recouped, and this will get passed on to renters in inflated rental prices.
“This, combined with new landlords’ tax, particularly the upcoming changes to mortgage interest release, means the rental market is far from reaching equilibrium.”