25th
Oct 2016
According to an article in The Guardian, letting agents have experienced a major increase of available properties to rent out, resulting in landlords being unable to increase rents.
An association for letting agents claims that less than a quarter (24%) of landlords have been able to increase their rents, which is the lowest it has been this year. The association's members have also told them that they have the highest number of unlet flats on their books over the last eighteen months.
The recent surge in availability of rental homes was down to the threatened increase of stamp duty on second homes which started on April 1st, and caused a scramble in buying up housing stock.
Private Sector Landlords are still extremely optimistic in spite of Brexit and the reduction of mortgage tax interest relief.
David Cox, managing director of the association of agents, said: “This month’s findings paint a really positive picture for renters. The supply of rental stock has risen astronomically, which suggests it’s not quite right that landlords are pulling out of the market as a result of [the referendum result]. This is supported in our findings, which reveal the number of landlords selling their buy-to-let properties hasn’t changed since April, when three landlords were selling up per branch.
“It’s good to see [fewer] landlords hiking rents this month, but 24% is still too high. The cost of renting is already high in many parts of the country and until the government converts its pledges and promises into bricks and mortar, we will not see renters reach a position where they are able to save to get on the housing ladder. It will be interesting to see how this is tackled in the autumn statement.”
Other statistics back up the claim that rents are mostly static (or falling) and show that the capital's average rent dropped by 0.7% and 0.3% in the South East in the last quarter, the North West's average rent rose by 2%.
The GMB union claims that throughout sixteen London boroughs the average rent for two bedroom accommodation is higher than the 50% of the average wage of tenants.
Warren Kenny, GMB London regional secretary, said: “These figures demonstrate the extent of the squeeze felt by workers and their families in London since the financial crisis in 2008. Rents have surged upwards as pay has been stagnant or falling.”
The market is divided over how next year's introduction on the phasing out of the higher level of mortgage interest tax relief will affect the PRS. It could cause a large number of landlords to jump ship and others to raise rents.
Dan Gandesha, chief executive of a buy-to-let crowdfunder, said: “Traditional landlords have been given a proverbial cold bath with recent tax change announcements. The hike in the stamp duty surcharge in April has certainly discouraged landlords from increasing their rental portfolios.
“Alongside tougher lending criteria and cuts to mortgage interest tax relief starting next year, many landlords will be now doubting if it’s worth the hassle, particularly in the south-east. Profits have been hit hard and those landlords that decide to stick with it, may just be forced to push up rents – not a promising prospect for tenants.”
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