There was a significant fall in both the number of new listings and properties let last month, as a lack of supply restricted choice for potential renters.
Following a vast improvement in activity levels throughout the UK rental market in March, compared with the previous month, the latest Agency Express Property Activity Index shows that national figures in April for properties ‘let’ saw a 22.1% month-on-month decline, while new listings ‘to let’ dropped by 19.7%.
The data appears consistent with the Association of Residential Letting Agents (ARLA Propertymark) latest findings that a growing number of landlords are choosing to exit the private rental market due to higher stamp duty costs and the phasing out of mortgage tax relief, which is reducing the supply of rental properties available.
Looking at performance across the UK, all 12 regions recorded by the Property Activity Index reported falls in new listings ‘to let’ as well as homes ‘let’.
Here are the regions that recorded the smallest declines in this month’s index:
Properties ‘To Let’
- West Midlands -13.4%
- East Midlands -13.5%
- North West -14.1%
Properties ‘Let By’
- Scotland -2.8%
- Yorkshire & Humberside -13.3%
- North West 18.2%
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London saw the biggest fall in both the volume of listings ‘let’ and ‘to let’ in this month’s property activity index at -26.1% and -24.3% respectively.
The decline is much less when looking at the index’s rolling three monthly figures, with new listings falling by 4.7% and properties ‘let’ dropping by 3.3%.
Stephen Watson, managing director of Agency Express, said: “This month we have witnessed a slowdown across the UK rental market. While our figures will be affected by the bank holiday weekends and reduced number of working days, the fall in activity seems greater than what we would anticipate.
“As we now move in to what is usually a robust period for the market, it will be interesting to see what advances are made in light of the difficulties that landlords and agents face.”
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The law of unintended consequences. The Government were told by pretty much every body representing the PRS that the effects of their housing and taxation policy towards private landlords would result in fewer homes available to rent and higher rents for everyone. Now those policies decisions are doing exactly what we said they would; and things will only get worse in the short to medium term at least.
The promise is that RSL's will solve the supply side problem of the housing market by an extensive government funded building programme. A great idea, socially responsible and a progressive taxation policy (reducing the bill for LHA over the long term). But will it work in 5 years, by the end of the parliament (any governments seeming event horizon).
On one hand we have an ever greater demand from an increasing population, a change in the make up of many families altering the housing provision required, a flawed planning process hindering new build through the "localism agenda" and NIMBY'ism, and a lack of funding because as a country we are already living beyond our means.
On the other we have private individuals willing to fill this funding gap and provide the quality homes the country needs, but who are discouraged form doing so by the very government who need their support.
The Conservative Party manifesto promises 100,000's more "council houses" but these won't suddenly appear the day after the election.
Until these extra units become available the onus will remain on the PRS to meet the growing need. Instead of supporting the sector government policy seems set to greatly restrict it. Will someone in the Conservative Party (presumably the next government) explain how they intend to square this circle?
Following on from last post, so what is the solution? My I be so bold at to make a few suggestions:
1. Scrap Section 24. Yes, it raises tax revenue but it is killer blow to future PRS investment and is simple wrong. Duhh!!! as my 8 year old daughter would say.
2. Keep the SDLT additional homes surcharge. Controversial within the sector, I know, but it is a progressive taxation policy and helps level the field between owner occupiers and investors. Any investor knows the score before they buy so, doing the maths, they know what they are getting in to before they buy (unlike S24 which is retrospective on those who bought, sometimes decades ago).
3. Don't ban agents fees, but do include a cap on fees. The increasing amount of work in starting a tenancy has to be done and someone has to pay for it. An outright ban of these costs being applied to the person who incurs them (the new tenant) means rents will rise for everyone including long term tenants. Anyone who says this will not happen has no idea how tight the margins in the sector can be, especially if you are dealing with LHA tenants where the time taken to establish the tenancy is often longer. I don't often say this, but anyone who claims rents won't rise as a result of this policy is just plain wrong.
4. Introduce a compulsory code of practice for letting agents. There are too many crooks in the industry - it is in everyone's interest to drive them out.
5. Simplify existing housing legislation. I often see demands in the media for more regulation, often on matters that are already covered by existing laws. Even the experts often find it difficult to wade their way through the plethora of existing laws to find a solution. Now is the time for a massive simplification of the law, bringing them all under one Act. This will leave no wriggle room for the rogues and also ensure the good landlords and agents don't get things unintentionally wrong.
Now that is off my chest I can get back to work. Comments and other suggestions welcome.
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