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Housing shortage set to drive up rents

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.”

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  • G romit

    The next 4 years are going to be very busy for letting agents as ~2m tenants will be moving into accommodation that the can afford, primarily due to the 30-50% rent hikes necessary to pay the tax increase under Sec.24 [like fuel duty on petrol it will be passed through to the consumer to pay].

  • Brit Sixteen Sixty Four

    Many tenants will buy up the properties which landlords sell as prices fall. Those greedy landlords who put up rents whilst mortgage rates are at historical lows will experience increased voids and those decent landlords will take their business away.


    Brit Sixteen Sixty Four living in an alternative reality where tenants can afford to save the money required to purchase a property these days. I don't know if you heard but according to the government property prices up to £400k are 'affordable' these days. By the time you add stamp duty to deposit, legal & survey fees etc, you would need to have at least £50k in cash before you can even think about buying.

    Sound like the average first time buyer to you? No, me neither.

    And forcing rents up through massive tax increases is going to be a massive help. Right?

    Time to wake up and smell the coffee.

  • Brit Sixteen Sixty Four

    Who says landlords are going to sell for £400k a property, the prices will drop till someone can afford to buy them. The landlord could hold out on the sale and risk voids as well as paying the mortgage themselves but that isn't very sustainable.


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