The dearth in available rental properties is worsening, according to research produced recently by the Association of Residential Lettings Agents (ARLA).
Almost three quarters (70 percent) of ARLA member offices say that there are more tenants than available properties. This is an increase from 59 percent last quarter and 24 percent in September 2009.
The situation is particularly pertinent in the South East, where 76 percent of member offices report more tenants than properties.
Ian Potter, operations manager of ARLA, said: “The spring period would usually see a rise in rental properties coming onto the market, and although there is some evidence of landlords considering selling up, it is not enough to counteract the change in supply.
“This situation has been deteriorating rapidly in recent months, as the supply and demand of homes to buy is also swinging out of kilter, making the prospect of a severe rental housing shortage ever more likely.
“In his Budget, the Chancellor did little to incentivise investment in the Private Rented Sector. In fact, the rise in Capital Gains Tax may actually discourage potential landlords from investing.
“This, combined with low construction levels and the cap on housing benefits, means that instead of the housing market getting back on its feet, what we may soon see is people going without homes they can afford – something that simply should not be allowed to happen.”
• A rise in demand for rental accommodation is being driven by a marked increase in professional applicants who have a strong desire to purchase their first home but simply don’t have access to the large deposits which the banks are still demanding.
This is one of several key trends that has affected the buy to let market in the last six months according to Caroline Kavanagh, group lettings director for Badger Holdings, parent company to Townends Estate Agents
She said: “During the early months of 2010, the increase in demand was quite astonishing and, whilst it did drop back slightly in some months, overall demand across the Townends network for the first six months was up 30 percent.
“Another clear trend has been the increasing number of tenants wanting to stay on in what we classify as our ‘prime’ rental properties. These are defined as well-located properties, which are presented in truly excellent condition throughout.
“In London and Surrey, demand for these prime properties is outstripping supply and this has led to rental increases of anything from 10 to 20 percent. Multiple competing offers and an extremely quick turnaround are also commonplace on the most desirable stock.”
For the next six months, Kavanagh is advising landlords who are trying to let their property to think carefully about how it is currently presented.
She said: “Landlords must remember that a lack of investment into their property can very quickly become a false economy as the property is likely to take longer to let and will not achieve the same level of rent as a better presented one.
“Overall the lettings market remains in robust health and I fully expect demand to remain high for the remainder of the year, particularly for prime stock. With property prices expected to adjust downwards in many areas, now may also be a good time for many landlords to consider adding to their property portfolio.”
