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TODAY'S OTHER NEWS

Rents in London set to increase as tenant fees ban approaches

Rents in London look set to rise sharply over the next few months, as the supply of rental accommodation dwindles while demand from tenants continues to go up, new figures from Chestertons show.

Across London as a whole, the London-based letting agents recorded a 24% annual increase in registered tenants seeking property during Q1, in contrast to a 2.4% fall in the number of available properties.

The data from Chestertons’ has found rent rises in South West London in particular are significantly outpacing the rest of the capital, despite the imminent ban on tenant fees, which comes into force on 1 June.

The Tenant Fees Act will ban certain upfront lettings fees and cap deposits, but Chestertons believes that renters in the capital are unlikely to feel the benefit as this follows a series of broader legislative changes that have pushed landlords out of the market at a time when demand in the private rented sector is fierce.

The changes over recent years to buy-to-let mortgage tax relief and the stamp duty hike for second homes have encouraged many smaller landlords to exit the market, significantly limiting the choice on the market for prospective tenants and driving an increase in rents.

In the capital, Chestertons reports that this strain is most apparent in popular South West enclaves, which have typically been dominated by ‘accidental’ landlords – those who through circumstance end up letting a second home.

The number of tenants registering for rental properties in the first three months of 2019 has soared 48% year-on-year in the South West of London – the biggest jump in demand across the capital. However, the number of available properties in areas including Battersea, Clapham, Wandsworth and Putney over the same period had dropped 30% compared to the first three months of last year.

The significant supply-demand imbalance in the rental market means that the South West was the only region to experience a decline in new tenancies during the first three months of 2019 – down 12% on Q1 2018. 

By comparison, in central London locations such as Kensington, Marylebone and Notting Hill, lettings were up 15% year-on-year.

This fierce competition for limited rental properties in the South West means that rents are climbing three times as fast in this area than elsewhere in the capital, data from Chestertons show, with rents in the South West up 5.9% in Q1 2019 year-on-year, with only a 1.2% annual increase recorded in central London, and 1.8% uplift in the North and East of the capital over the same period.

Richard Davies, head of lettings at Chestertons, said: “Renters may welcome the ban on fees as it saves on upfront costs – but in terms of its impact on people’s finances, it’s distracting from the bigger issues at play.

“It’s been a turbulent few years for landlords and tenants are starting to feel the impact. With the Government’s reforms to mortgage tax relief, stamp duty on second homes, and the recent announcement of the end of ‘no fault evictions’, the buy-to-let market has become significantly more difficult to manoeuvre and as a result, it’s shrunk.”

He added: “For London’s renters it’s tackling the shortage of available properties that will make the difference – not the overhaul in tenancy fees.”

Poll: Is now a good time to invest in London’s buy-to-let market?

PLACE YOUR VOTE BELOW

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    Rents increase due to the tenants fees ban?

    Well there's a shock! It's as if the housing minister didn't see this coming!

    Unlike everyone else!

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    he like most pols has no idea

     
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    I have been a landlord for 35 years, in yorkshire. and its time to get out . good luck to you all that want to stay . ho and this will hit the poorest hardest I started letting go my Dss tenants 12 months ago.

    Paul Barrett

    Steve
    Your sentiments I'm sure are shared by hundreds of thousands of other LL.
    It is a crying shame that LL are being driven out of the PRS by naive idiots.
    There seems to be a general ignorance amongst the PTB that seem to believe that LL will stay in the PRS come what may.
    They couldn't be more wrong.
    For a start a major reason for investment in BTL property is for hoped for CG..
    That hope is gone at least for the next decade.
    With thin yields in the SE compounded by S24 etc LL with gains will be better off baling to lock in those gains.
    The threat of Corbyn would be enough to devastate CG achieved to date.
    A bird in the hand and all that!
    Yes CGT is painful but a lot less painful than if most of the gain is wiped out by a Marxist led Labour Govt.
    Now is the time to take profits after 18 years of gains where achieved.

    Low quality tenants will suffer as few of the remaining LL will wish to take them on due to all the problems that such tenants can cause.
    If a Tory GE win occurs one would hope that S24 and the SDLT surcharge would be abolished.
    That could lead to the return of some of the LL who would have baled in the meantime.
    Obviously there would need to be an effective eviction process especially in rent defaulting cases.

     
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    Been at it same period 35 years plus, will sell up have over 45 left now and go Commercial. Stuff stupid council rules that apply to Professional LLs but not themselves.
    Lost over 3m in 2007/8 cc asset wise, only now back where we were.
    Let the council house like they did in 50s,60s and 70s.

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    Rule 1, dont have UC tenants.
    Rule 2 dont have daily curry eaters.
    Rule 3, do full referencing, bank statements, id,wage slips, LL ref, Employers details with pay slips.
    Rule 4. Cash for Deposit and first months rent, or 6/12 months rent in advance if foreign.
    Rule 5, only use LA who charges £200 max for tenant find only.
    Rule 6 ,tenants sign TA, Inventory Fact Sheet on Mould Damp Legionnaires disease.
    Rule 7, inspections every 2 or 3 months.
    Rule 8 collect or receive rent on DD, no excuses No rent no Let, simple.
    Rule 9 deal with issues immediately.
    Rule 10 tell council what you have done and make them listern.
    Rule 11, see all your tenants.

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    Is that you Fergus?

     
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    I am down sizing my portfolio keeping my higher yielding houses which I was picking up for 45k / 50k and they let for 550 and have people queuing up to let them more expensive ones are getting sold and buying abroad all because of s24 and all the other nonsense that’s being thrown at us

  • Paul Barrett

    It does seem from the comments on this thread that LL of long experience and by default successful LL are effectively announcing that they have had to varying degrees enough!!-
    As such these LL are the ones that should be listened to.
    Unfortunately they are being ignored and so those LL of long experience are giving up.
    That surely must tell the PTB something.
    For a sector to lose it's cadre of long experienced LL is disastrous.


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