Tenants Fighting Each Other Over Rental Properties
As Supply Drops And Demand Increases
Tenants looking to rent in the UK’s private rented sector face competition from other would be tenants as demand increases and supply contracts, according the Association of Residential Letting Agents (ARLA).
ARLA’s latest report has discovered that 68% of landlords surveyed reported more interested tenants than available rental properties.
This is the largest successive increase in tenant demand in the last 12 months, with tenant demand figures up from 46% in Q3 2013, 54% in Q1 2014, 59% in Q2 2014; meaning an increase of 9% between the second and third quarters of the year to date.
The tenant demand data is reinforced by the fact that supply of suitable rental properties in the private rental sector has decreased in the last quarter, with ARLA letting agent members recording a 6% drop in the average number of managed Buy To Let properties on their books, down from 143 to 135 per member agency.Available rental stock levels are set to continue decreasing, as ARLA members reported that the number of buy to let landlords investing in property has fallen 8% in the last quarter, down from 35% to 27%.
The number of buy to let landlords selling their rental properties has increased by 5% over the same time frame, down from 27% to 32%.
The overall result, is that more landlords are selling investment properties than there are landlords buying property, a reversal of fortunes from four years ago when more rental properties were being purchased by contrarian property investors who were among the only activists in the market.
Whilst the overall property stock is down, some ARLA Licensed members reported that a large proportion of BTL 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 has risen from 9% to 16% in the last quarter.
ARLA Managing Director, David Cox, said: “This quarter, we have seen demand for properties in the UK private 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 BTL property, tenants are finding it increasingly difficult to secure contracts. However, it’s great to see an increase in consumers making an active play to check that their landlords are financially viable. Renting a property and laying out considerable finances is a big commitment, and it is important that consumers ensure they are protected. By choosing to rent through an ARLA licensed agent or landlord, tenants’ money is not only guaranteed by a client money protection scheme, but tenants are also given peace of mind that any issues can be dealt with in a professional and safe manner by a qualified agent.”
There is some good news for tenants in the private rented sector as they have been taking responsibility over who they rent from with an increase in the number of tenants requesting references on potential landlords from lenders, with the figure increasing from 7% to 9%.
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