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| Rising supply of unlet properties curbing rent hikes, say letting agents Rising supply of unlet properties curbing rent hikes, say letting agents | |
| (2 months later) | |
| A surge in the supply of rental properties on the books of letting agents is forcing landlords to peg back rent rises, according to an industry body. | A surge in the supply of rental properties on the books of letting agents is forcing landlords to peg back rent rises, according to an industry body. |
| The proportion of landlords implementing increases fell to 24%, its lowest level this year, said the Association of Residential Letting Agents (Arla, while the number of unlet flats on agency books rose to the highest level for 18 months. | The proportion of landlords implementing increases fell to 24%, its lowest level this year, said the Association of Residential Letting Agents (Arla, while the number of unlet flats on agency books rose to the highest level for 18 months. |
| Part of the reason is the stamp duty change on second homes, which prompted a rush of buy-to-let purchasers in February and March who were trying to beat the tax increase. | Part of the reason is the stamp duty change on second homes, which prompted a rush of buy-to-let purchasers in February and March who were trying to beat the tax increase. |
| But the EU referendum, and the prospect of further buy-to-let tax hikes in 2017, appears not to have dented the appetite of landlords to invest in the market. The number of prospective tenants has also risen, to 40 per lettings branch from 37 in June, defying expectations that the Brexit vote would dampen demand. | But the EU referendum, and the prospect of further buy-to-let tax hikes in 2017, appears not to have dented the appetite of landlords to invest in the market. The number of prospective tenants has also risen, to 40 per lettings branch from 37 in June, defying expectations that the Brexit vote would dampen demand. |
| David Cox, managing director of Arla, said: “This month’s findings paint a really positive picture for renters. The supply of rental stock has risen astronomically, which suggests it’s not quite right that landlords are pulling out of the market as a result of [the referendum result]. This is supported in our findings, which reveal the number of landlords selling their buy-to-let properties hasn’t changed since April, when three landlords were selling up per branch. | David Cox, managing director of Arla, said: “This month’s findings paint a really positive picture for renters. The supply of rental stock has risen astronomically, which suggests it’s not quite right that landlords are pulling out of the market as a result of [the referendum result]. This is supported in our findings, which reveal the number of landlords selling their buy-to-let properties hasn’t changed since April, when three landlords were selling up per branch. |
| “It’s good to see [fewer] landlords hiking rents this month, but 24% is still too high. The cost of renting is already high in many parts of the country and until the government converts its pledges and promises into bricks and mortar, we will not see renters reach a position where they are able to save to get on the housing ladder. It will be interesting to see how this is tackled in the autumn statement.” | “It’s good to see [fewer] landlords hiking rents this month, but 24% is still too high. The cost of renting is already high in many parts of the country and until the government converts its pledges and promises into bricks and mortar, we will not see renters reach a position where they are able to save to get on the housing ladder. It will be interesting to see how this is tackled in the autumn statement.” |
| Other surveys have also painted a picture of static or falling rents. According to Rightmove, rents fell by 0.7% in London and 0.3% in the south-east in the third quarter of 2016, but were up 2% in the north-west. The upmarket estate agency Knight Frank said rents in prime areas of the capital were down by 4.7% over the past year. | Other surveys have also painted a picture of static or falling rents. According to Rightmove, rents fell by 0.7% in London and 0.3% in the south-east in the third quarter of 2016, but were up 2% in the north-west. The upmarket estate agency Knight Frank said rents in prime areas of the capital were down by 4.7% over the past year. |
| Flat or falling rents will bring some relief to tenants who have had to endure huge increases in recent years. According to the GMB union, average rents for two-bedroom apartments have risen to more than 50% of gross average earnings of residents in 16 London boroughs. | Flat or falling rents will bring some relief to tenants who have had to endure huge increases in recent years. According to the GMB union, average rents for two-bedroom apartments have risen to more than 50% of gross average earnings of residents in 16 London boroughs. |
| In Westminster, rents are highest at 73% of median pay, followed by Hackney at 67% and Islington at 66%. | In Westminster, rents are highest at 73% of median pay, followed by Hackney at 67% and Islington at 66%. |
| Warren Kenny, GMB London regional secretary, said: “These figures demonstrate the extent of the squeeze felt by workers and their families in London since the financial crisis in 2008. Rents have surged upwards as pay has been stagnant or falling.” | Warren Kenny, GMB London regional secretary, said: “These figures demonstrate the extent of the squeeze felt by workers and their families in London since the financial crisis in 2008. Rents have surged upwards as pay has been stagnant or falling.” |
| Property market experts are divided about the potential impact of next year’s big increases in the taxation of landlords who have buy-to-let mortgages attached to their homes. | Property market experts are divided about the potential impact of next year’s big increases in the taxation of landlords who have buy-to-let mortgages attached to their homes. |
| Some surveys suggest landlords will begin to pull out of the market, but others say they will hold on – and increase rents to compensate for the tax changes. | Some surveys suggest landlords will begin to pull out of the market, but others say they will hold on – and increase rents to compensate for the tax changes. |
| Dan Gandesha, chief executive of Property Partner, a buy-to-let crowdfunder, said: “Traditional landlords have been given a proverbial cold bath with recent tax change announcements. The hike in the stamp duty surcharge in April has certainly discouraged landlords from increasing their rental portfolios. | Dan Gandesha, chief executive of Property Partner, a buy-to-let crowdfunder, said: “Traditional landlords have been given a proverbial cold bath with recent tax change announcements. The hike in the stamp duty surcharge in April has certainly discouraged landlords from increasing their rental portfolios. |
| “Alongside tougher lending criteria and cuts to mortgage interest tax relief starting next year, many landlords will be now doubting if it’s worth the hassle, particularly in the south-east. Profits have been hit hard and those landlords that decide to stick with it, may just be forced to push up rents – not a promising prospect for tenants.” | “Alongside tougher lending criteria and cuts to mortgage interest tax relief starting next year, many landlords will be now doubting if it’s worth the hassle, particularly in the south-east. Profits have been hit hard and those landlords that decide to stick with it, may just be forced to push up rents – not a promising prospect for tenants.” |
| But Rightmove said during September, buyer inquiries from potential landlords and investors were up 30% compared with May, after a short-term dip after the stamp duty changes came into force in April. | But Rightmove said during September, buyer inquiries from potential landlords and investors were up 30% compared with May, after a short-term dip after the stamp duty changes came into force in April. |