6th November 2019
ARLA Propertymark has just released the latest information regarding rents across the UK. As I predicted before the Tenant Fee Act came into force this summer, rents in the Private Rented Sector (PRS) are rising at a disproportionate rate compared to inflation. Landlords are facing increased costs as a consequence of the Act’s implementation, with landlords passing the extra costs on to tenants by way of rent increases. Propertymark’s figures show that 58% of landlords are increasing rents, either via annual reviews or when a tenant moves out and the property is relisted for letting.
The figures released also show a fall in the number of available properties on agents’ books. At Moores, we’ve seen a small number of landlord clients sell their buy-to-let properties this year. This has been a consequence of increasing legislation and punitive tax changes, especially to mortgage interest relief. We are not seeing the properties sold replaced with new stock. The higher rate Stamp Duty landlords have to pay when purchasing buy-to-lets is acting as a disincentive.
Many of the properties we have sold have been purchased by first time buyers. This is excellent in terms of helping first time buyers on to the housing ladder. But a reduction in supply will inevitably lead to rents in the PRS being pushed up even higher – a result Government did not intend as a consequence of the Tenant Fee Act. The Act was implemented to make renting more affordable. Although the upfront cost of applying for a rental property has come down for tenants, I am afraid, as predicted, in the medium to long term tenants will find renting more expensive.
No matter how much Government ‘tinkers’ around with legislation, the basic problem is one of insufficient homes in the UK for the population. The population is forecast to grow (irrespective of the outcome of Brexit). It is therefore essential that Government makes house building easier and cheaper for developers (there are of course pros and cons to this, which I don’t propose to debate here) and it must provide central funding to councils and Housing Associations to build more social/affordable housing.