There was a significant decline in rental stock coming on to the market in the final quarter of 2017, placing greater pressure on the private rented sector, new figures show.
The results of Belvoir’s Q4 rental index, and a survey of landlord trends, suggest that rents are likely to increase in the coming months as fewer rental properties come on to the market as tenancy lengths continue to rise.
With growing signs that some landlords are starting to sell their properties as a result of recent tax changes affecting the PRS, more tenants are keen to commit to longer tenancies.
“Although we are not seeing a big landlord sell off yet, our franchisee survey confirms that over 85% of offices are reporting that landlords are selling some properties,” said Belvoir CEO Dorian Gonsalves.
Belvoir has long warned that government steps to reduce buy-to-let stock would have an adverse impact on tenants in the future, as it simply means that they have will nowhere to live, and this is now reflected by the fact that significantly fewer landlords are acquiring properties.
But despite the growing supply-demand imbalance in the PRS, rents remain fairly static at the moment, according to Belvoir.
Gonsalves explained: “This is due to the fact that that inflation and wages have caught up with each other, which typically means tenants don't have the spare cash in their back pockets to support higher rents.
“In London we even saw rents dropping slightly. For all Belvoir offices who have traded consistently since 2008 there is a 2% increase year-on-year, and when compared to the 2016 annual average, the rental increase is 3.25%.”
Belvoir looked at English regional rental performances and found that the lowest rents in Q4 were in the North West at £597 per calendar month (pcm) compared to £630pcm in the North East.
Rents were unsurprisingly most expensive in the South East at £1,046pcm and London rents averaged £1,431pcm.
Tenants are continuing to stay in their properties longer, with Belvor’s research showing that over half - 52% - preferred a tenancy of 13-18 months in Q4 2017, while almost a quarter - 23% - opted to stay for 19-24 months.
Despite the time of year, tenant arrears and evictions fell back in Q4, with nearly 90% of Belvoir offices carrying no or just one eviction in Q4 ‘17.