Private rents have been gradually increasing for quite a while now and are expected to continue on moving upward in the foreseeable future as well, according to research from the Association of Residential Letting Agents (ARLA).
Eight in ten (80 per cent) of the ARLA members are projecting private rents to continue to soar over the next five years. This could be related to the planned tax relief cut for landlords, which was announced by Chancellor George Osborne in the Emergence Budget in July.
The ARLA’s latest Private Rental Sector (PRS) Report shows that over a third (36 per cent) of letting agents have reported a rise in rents between May and June 2015.
On a regional basis, almost half (48 per cent) of letting agents in the East Midlands reported rent hikes in June, which was the highest proportion for the period. On the other end of the spectrum, only 17 per cent of agents in Wales stated that rents have increased.
Slight change in supply and demand
Supply and demand shifted marginally in June, with an average of 178 properties managed per branch, compared to 179 in May. There was an average of 36 prospective tenants registered per ARLA branch in June, the same as the previous three months. The report also revealed that worryingly, supply in London continued to drop with only 118 rental properties managed in June, compared to 134 in May – a decrease of 12 per cent.
Short-term lets more popular in the summer
As the summer holidays begin, interest in short term lets has risen further, with a third (33 per cent) of agents reporting an increase in enquiries for short term lets in June. This has risen by seven per cent from last month when a quarter (26 per cent) reported an increase in enquiries.
Agents in the North West have witnessed the largest increase in enquires for short term lets, with two fifths (43 per cent) of ARLA member agents reporting a rise in June.
David Cox, managing director, Association of Residential Letting Agents (ARLA) commented:
“It is worrying to see so many agents reporting an increase in the cost of rent over the last six months, especially considering so many people rent as a way to bridge the gap whilst they save to get onto the property ladder.
“Findings like this continue to prove that the housing crisis isn’t going to disappear anytime soon and it will take a while before we see steps heading in the right direction. The impact of the Chancellor’s reductions to the amount of tax relief buy-to-let investors can claim – announced in the Emergency Budget this month – will affect the cost of renting over the coming months and is likely to mean it will take even longer to see any improvement in affordability in the private rented sector.”
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