The number of properties coming on to the private rental market continues to fall, driving up rents across many parts of the UK - especially in market towns - a new report shows.
The fall in housing supply is largely due to the lack of new landlords bringing new stock to the market, according to an emerging trend observed by Belvoir, one of the UK’s largest letting agents.
Belvoir’s chief operating officer, Dorian Gonsalves, believes that the decline in the property stock in the PRS is directly related to recent tax increases, such as the 3% stamp duty on additional properties, including buy-to-let homes, and changes to the way mortgage interest tax relief is treated, which means some landlords may end up with a higher tax bill than profit.
“As a result of this stock shortage, properties are often rented to the highest bidder, typically the wealthier tenant, which is raising rents beyond the traditional plus or minus four to five percent trend,” he said.
Belvoir's Q1 rental index, which was compiled by property expert Kate Faulkner, shows that the firm’s offices have seen average rents increase year-on-year by 5.75%, from £728 per calendar month (pcm) in Q1 2016 to £770pcm in Q1 2017, led by gains in some parts of the East Midlands and Yorkshire.
The latest data analysed shows rents range from £602pcm in the North West, £655pcm in the East Midlands, through to £842pcm in the South West and £1,440pcm in London.
In terms of length of tenancy, Belvoir offices report that 43% of tenants are staying between 13-18 months, 29% are renting for 19-24 months and 18.2% are renting for over two years.
But average void periods in between tenancies seem to currently be on the increase with 60% of properties taking up to two weeks to let whereas fewer homes are being let within a week, suggesting a slight slowdown in tenant demand.
“Despite increases in rents in some regions, rent arrears are not increasing, suggesting that tenants are currently coping with landlord rent rises,” Gonsalves added.