A new report has found that more tenants than ever are trying to rent property in the UK, but that the supply of properties is not keeping up with demand. Renters are finding it harder to secure a suitable property, and rents have been rising as landlords look to take advantage of the situation.
The January 2020 report, released by ARLA Propertymark, is the latest of their monthly updates on the state of the private rented sector, and deals with key findings gleaned from their membership of over 9,000 professional letting agents.
Record numbers of tenants searching for properties
Letting agency branches surveyed for the report saw record numbers of prospective tenants signing up during January, with an average of 88 tenants registering per branch. This is up from 56 in December, and while you’d expect a bit of an increase in the new year, this represents an all-time high since the surveys began.
Landlords increase rents as numbers of rental properties dwindle
While tenant demand was high, the same could not be said for the supply of UK rental housing. On average, the agency branches surveyed were managing 191 properties each – the lowest figure since July of last year. More significantly, agents were marketing fewer properties than in January 2019 (when there were 197 per branch), and were reporting more landlords selling their buy-to-let properties (4 per branch in January 2020 compared to 3 per branch in January 2019).
As might be expected, this combination of high demand and restricted supply has seen several landlords taking the opportunity to increase rents. Of the agents surveyed, 42% witnessed rent rises, which represents a significant increase on 26% in January 2019 and 19% in January 2018.
It’s possible that the uplift in rent increases isn’t quite as straightforward as simple opportunism. A lot of agencies responded to the Tenant Fees Ban last year by jacking up their percentages, and many will have pledged to landlords that they would make up for this by pushing for rent rises. As tenancies come up for renewal, agents may be feeling under pressure to make good on these promises and to recoup some of their landlords’ lost income.
The impact of short-term lets and a hostile environment for private landlords?
It’s worth noting that the publishers of the report are a professional and regulatory body for letting agents, and so they do have rather an agenda when it comes to analysing these findings. All the same, the figures contained in the report are quite thought-provoking in the context of a policy and budgetary framework that has hit private landlords harder than most in recent years.
Commenting on the research, ARLA Propertymark’s CEO, David Cox, highlighted the growing popularity of short-term lets (through websites like Airbnb, for example) as a factor that is damaging the private rented sector, and called for the government to use the upcoming spring budget to encourage rather than penalise private landlords. ‘It’s important that the Government works to make the private rented sector attractive to landlords again,’ he wrote, ‘rather than introducing complex legislation which ultimately squeezes the sector and leaves tenants worse off.’
While his comments refer mainly to the budget, they could just as easily apply to other pieces of legislation like the upcoming changes to eviction law or the rent controls that form a key part of Sadiq Khan’s re-election bid for London mayor. The contentious dilemma of regulation versus a free market is at the heart of the private rented sector, and whatever the various interested parties say, there are few clear answers. This latest piece of research, however, contributes to a growing body of evidence that the government’s current approach to the sector isn’t working well, and if demand for rented accommodation remains high then we will need to find some way to stop the supply dwindling at such a rate.