Buy-to-let
The supply of rental property is shrinking, with more landlords selling buy-to-let properties than buying them over the last three months, according to the Association of Residential Letting Agents (ARLA) .
The association is warning that consumers looking to rent will face fierce competition for privately rented residential property as demand among tenants increases and supply contracts.
A quarterly report from ARLA found 68 per cent of respondents reported more would-be tenants than properties available over the July to September period – a significant increase of nine percentage points compared to the April to June period.
This is reinforced by the fact that supply of residential property on the private rental market decreased in the last quarter, with ARLA licensed members recording a 6 per cent drop in the average number of managed buy-to-let investment properties on their books, from 143 to 135 per member agency.
And ARLA says stock levels are only going to continue decreasing, as members reported that the number of landlords investing in buy-to-let property shrunk by 8 percentage points in the last quarter, from 35 per cent to 27 per cent.
At the same time, the number of landlords selling their buy-to-let property increased by 5 percentage points, from 27 per cent to 32 per cent.
As a result, the relationship between buying and selling buy-to-let investments has reversed, with landlords selling property now exceeding landlords buying property for the first time in 4 years.
David Cox, managing director at ARLA, comments: “This quarter, we have seen demand for properties in the rental sector significantly rise, while the supply of residential rental properties has dropped.
“This activity has bucked the seasonal trend recorded over the past 11 years for this quarter, in which we normally see an increase in the number of new tenancies signed up. However, with landlords not investing in new buy-to-let property tenants are finding it increasingly difficult to secure contracts.”
Whilst the overall property stock is down, some members reported that a large proportion of buy-to-let properties that were put up for sale have since come back onto the rental market, after landlords’ bids to sell had been unsuccessful.
The number of these properties coming back onto the lettings market rose from 9 per cent to 16 per cent in the last quarter.
