The seasonal lull in the supply of available rental properties, along with falling demand, could well be the “calm before the buy-to-let storm”, the Association of Residential Letting Agents has warned.
ARLA said that in December agents registered an average of 29 prospective new tenants, down from 34 in November, a fall of 15%.
Supply also dipped last month, with an average of 182 properties managed per branch, down from 189 in November. Only two in ten (18%) ARLA letting agents reported a growth in rent, a five percentage point fall from November and the lowest reported in 2015.
David Cox, managing director of ARLA, said: “With supply, demand and the number of agents reporting rent increases all declining in December, this could well be the calm before the buy-to-let storm. Buy-to-let landlords determined to complete purchases before the changes come into force in April are storming the UK housing market, meaning the lull we’d usually see is less significant. But subsequently, after April, we’re very likely to see the number of buy-to-let properties on the market begin to decrease, and this will most certainly have a detrimental effect on renters across the country.”
As part of the government’s efforts to dampen the buy-to-let market, landlords and second home owners will have to pay stamp duty of 3% from April. The amount of tax relief landlords can claim on properties will also fall from April 2017. Critics of the policies believe they will lead to an increase in rents as landlords look to pass on the extra cost to tenants.
The stamp duty reforms to buy-to-let properties announced in the Autumn Statement are causing concern amongst letting agents, ARLA said.
Two in three (62%) ARLA agents predict the stamp duty changes from April will push up rent costs, and a further two-thirds (65%) believe the reforms will push landlords out of the market and reduce supply.
A quarter (24%) of agents said they had seen an uplift in interest from buyers looking to invest in buy-to-let properties before the new changes are introduced in April.
Those looking for rental properties in London continued to struggle, with an average of just 108 properties managed per branch, 43% less than the national average.
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