PRS Tenants Could Be Hit With Rent Increases
Despite Falling Inflation
The increase in demand for rental properties in the UK’s private rental sector (PRS) from would-be tenants could drive local rental prices through the roof in some parts of the country according to a new report published by the Association of Residential Letting Agents (ARLA).
According to data published in the latest ARLA monthly Private Rented Sector report 31% of letting agent members recorded an increase in the cost of monthly rent for rental properties in UK regions between January and February this year.
41% of letting agents in the South East of England reported landlords increasing rental prices for their properties. However, in Wales only 13% of letting agents reported landlords increasing rental asking prices.The rise of rental prices could in part be due to the increase in fierce competition among prospective tenants for rental properties, with a reported average of 40 prospective tenants registering per ARLA registered letting agent during February, up from an average of 38 in January.
The increase in tenant demand is exacerbated in some UK regions due to the lack of suitable rental properties available on the market for rent, good news for property investors in some areas, such as Wales, where the lowest proportion of landlords increased their property rental prices but competition for properties is above average (46 tenants registered per ARLA branch). The East of England also has above average tenant demand with 45 tenants per ARLA branch searching for rented accommodation.
However the report says that supply in the rental market remains steady overall, with an average of 184 rental properties managed per ARLA member branch.
There is the highest level of property supply in the East Midlands with an average of 269 properties available per branch, whilst London has seen supply drop to an average of just 122 available properties to rent per branch, down from 140 in January, increasing the already intense competition among tenants in the capital.
In fact according to some newspaper reports, it is cheaper to buy property than it is to rent, but that fact doesn’t take into account the concept that many people would struggle to pass the strict affordability checks performed by lenders, due to lack of disposable income.
Demand for rented property is still increasing, and monthly rents will follow suit because when tenant demand is high then the premium for rental property also increases, although this may not be such good news for tenant’s and housing charities.
In Bristol one letting agent has caused outrage by writing to local landlords pointing out that tenant demand was so high they should be thinking about raising rents.
The letter titled “How Do You Get More Rent?” was sent by the manager of the C J Hole branch in the Bristol suburb of Southville and included the following inflammatory sentences:
“With rents increasing every week in Bristol, it is highly likely your property is due a rent increase. The demand from prospective tenants is far exceeding the number of properties available and we have never seen such a buoyant rental market.”
The backlash has been tremendous with 11,500 local residents as well as a number of tenant groups up in arms threatening a protest march on Saturday 11th April 2015 outside the letting agent’s offices. The march is being organised by a number of activist organisations including Acorn, a pressure group which has protested against letting agents in Bristol previously.
Acorn started the petition on the 38 degrees website, encouraging local people to sign, it states:
“The letter [from C J Hole] shows how some estate agents and landlords are seeking to cynically profit from the housing crisis in Bristol at a time when inflation has declined to 0.3% and deflation is predicted. I think there is no justification for increasing rents at a time when prices are actually going down. In addition, real average earnings have fallen by eight per cent since 2008. Such predatory rental practices are an attack on low income people and threaten the most basic of rights – the security of a home to live in.”
It’s sad when you run a business in a sector where professionals are hated. We are service providers for the community, giving people decent homes to live in for a fair monthly cost, we are expected to obey the law of the land despite every obstacle that Government, public opinion and media sentiment throw in our path, but should we dare to ask for more rent, we will be thrown to the wolves.
The truth is landlord operating costs are not falling alongside inflation, landlords are forced to pay for things that tenants would not even dream of, such as commercial water rates in properties split into flats, increased repair costs, because skilled tradesmen want paying for their time, skills and experience, the list could go on and on…
We will report on the outcome of the Bristol protest march next week
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