July 2019 marked the highest level of private tenants experiencing rent rises on record according to ARLA Propertymark’s latest PRS report.
The trade body for letting agents reported that 63% of its members saw landlords increasing rents in July. In fact, year on year, the number of tenants facing rent increases is up. Increasing from 31% in July last year and from 55% last month alone. This is driven largely by a widening supply vs demand imbalance in the market.
Letting agents had an average of 184 properties under management per branch in July which was down from 199 the month before.
The reasons for this movement are multi-faceted.
It is likely, at least partly, due to the fact that a number of landlords exit the market during the summer months, with July being the month in which the most tend to sell up. The Tenant Fees Act also came into force in June, which could well have triggered more landlords to exit the market, whilst others have responded by simply raising rents to cover the fees that agents have been banned from charging. This has simply shifted the fees from the tenants’ upfront costs and instead rolled it into their monthly rent prices, thus creating a price hike.
The increased levels of legislation have squeezed landlord’s profitability and made many question the wisdom of remaining in the market. As landlords exit the market, competition levels rise as supply falls. This causes prices to rise and reduces the accessibility of some properties to tenants, which again leaves landlords in a bind, with many again choosing to simply sell up.
With more legislation of the industry expected this increase in pressure is expected to be felt ever-more acutely by landlords, further pressurising the market as more choose to exit.
As always, we will keep a close eye on the market and provide our honest opinion on any BTL opportunity. For more information about how to make your buy-to-let property successful and commercially viable contact Walton Estates today.