27% of all agents who deal with property letting, have indicated that rents have risen in the last couple of months to a level not seen since July 2016. Private rents have now risen by 1.8% during the last year. Even with the recent upheavals, only 2.8% of tenants actually managed to negotiate any sort of reduction.
There has been a steady increase in the availability of rental properties, it is up by some 11% on last year’s figures. It is also noticeable that the volume of landlords wanting to sell rather than rent, has also fallen.
David Cox, ARLA chief executive, feels that the ban on letting fees in England could result in rents rising by £103 during this coming year. This is on top of any organic rent growth that may happen. The only stumbling block would be if availability significantly increased, allowing for more competition. But this is widely considered as not likely to happen in the near future.
Estimates are being made that rents in England are most likely to increase by 15% during the next three years. These figures could be very regional, although all areas are likely to see some degree of increase. It is also predicted that rental prices are going to rise quicker than general house prices. Landlords need to find ways to cope with added costs caused by tax amendments, harder criteria for money lending, and new stamp duty controls.
Many estate agents are reporting considerable increases in numbers of people seeking rental accommodation. Some £9,000 is needed for a 5% deposit on an average house purchase. Research suggests that approximately six million households do not have these sorts of funds, and are therefore forced to remain in rental accommodation, unable to buy their own property.
“When someone is not in a position to buy, they obviously start looking for somewhere to rent, government policies have done nothing to benefit either landlords or tenants,” explains Dorian Gonsalves, Belvoir chief operating officer and a member of the Board of The Property Ombudsman.
The banning of letting agent fees is likely to create a time of adaption and change. The market will readjust, but loss of revenue will only result in increases in areas where they can be covered, almost inevitably leading to rental rises.
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