The number of new tenancies has been at record levels for the past year but the private rental sector (PRS) may finally be running out of space to cater for tenant demand, according to the Association of Residential Letting Agents (ARLA).
The number of agents from ARLA’s 6,000 members across the UK stating that there are more tenants than properties has reached the highest level since records began.
74 per cent of respondents believe that demand is outstripping supply, as has been the case for the past four quarters. The increase in demand is particularly acute in London and the south east and suggests that there is insufficient supply of property to meet tenant demand.
The survey also demonstrates that the periods in which tenants are staying in their properties has increased to a record high of 19 months, as tenants are wary of trying to find a new property in such a competitive market.
The number of new tenancies signed up by agents has risen rapidly in a consistently upward trend since 2001. But this figure has remained consistent at 34 new tenants every month per branch throughout 2011 after record numbers of new renters entered the market in 2010.
ARLA’s member agents believe that this may be because there is simply a lack of desirable property on the market to entice new renters as the PRS finally feels the strain of supporting the UK’s housing slump.
Tim Hyatt, president of ARLA, said: “The UK cannot rely on the rental sector to support the housing market in perpetuity. The reality is that there is a finite amount of rental property and unless both housing supply and mortgage availability improves then renters will find that their options in the market are reduced.”
“The Government is doing little to encourage landlords to invest in new properties therefore we are running out of quality stock to offer to tenants. This is reflected in rent increases and a lack of choice for consumers.
“Within such an intensely competitive market, we would advise tenants and landlords to seek the best possible advice from agents as there will be those that seek to exploit this situation. Engaging with an ARLA-licensed letting agent is one way to protect your assets guard against this and guard against unethical operators.”
Ian Potter, operations manager of ARLA, added: “Although the Prime Minister has announced plans to re-instate Right to Buy and new funds to finance new build, we would query how many properties within the social sector are blocked. This can be by either by elderly tenants who do not want to leave the ‘family home’ or the economically poor who, even with Right to Buy, will struggle to finance a purchase. How many properties will have to be sold to finance each new build?”
