BUY TO LET STAMP DUTY TRIGGERS PESSIMISM AMONGST LETTING AGENTS
•Two in five (40%) letting agents predict supply will decrease, a sharp rise from October
•Only 23% of letting agents report rent hikes for tenants – the lowest this year
Two in five letting agents are predicting supply will decrease over the next five years – the highest rate this year, according to the Association of Residential Letting Agents (ARLA) monthly Private Rental Sector (PRS) Report1.
David Cox, managing director, Association of Residential Letting Agents (ARLA), says: “This month’s findings are triggered the Chancellor’s announcements around buy-to-let (BTL) tax in his Autumn Statement. When the ‘rabbit’ was first pulled out of the hat, we said these changes would be ‘catastrophic’ for the rental sector and this has been echoed by letting agents across the country. The new stamp duty increases will make owning a BTL unprofitable for a lot of landlords, and certainly make new investors think twice about purchasing a BTL property.”
Cost of renting
Tenants experiencing rent increases continue to fall, with less than one quarter (23%) of letting agents reporting rent increases for tenants in November, down from 25% in October – and the lowest this year.
Supply and demand
Demand for rental properties increased marginally in November, alongside supply of available housing – likely a result of tenants preparing themselves to find new rental properties in the New Year. ARLA agents registered an average of 34 new tenants per branch this month, up from 33 in October.
Supply of rental accommodation also increased in November, rising by nine per cent, from an average of 173 properties managed per branch in October, to 189 this month. However, renters in the capital will still struggle to find a property, with only 121 properties managed per branch – 36 per cent less than the UK average.
David Cox continued: “It’s promising to see that the number of agents reporting rent increases is continuing to decline, and this should spread some Christmas cheer amongst renters renewing tenancies or looking for a new property to rent. However, just under a quarter of tenants are still unfortunately seeing hikes in their monthly rent payments. But if we continue to follow trends we’ve seen in previous months, we should see fewer tenants experiencing increases as we welcome in 2016.”