Nearly a third (31%) of letting agents saw an increase in the cost of monthly rent for tenants from January to February 2015, according to the Association of Residential Letting Agents (ARLA) monthly Private Rented Sector Report.
The South East of England saw the highest number of landlords increasing rent per calendar month, with two fifths (41%) of agents in the region reporting an increase. It’s not as bad for Welsh tenants though, as only 13% of agent’s reported uplift in rent prices.
An increase in rents may be down to the fierce competition for rental property. ARLA licensed agents reported an average of 40 prospective tenants per branch in February, up from 38 in January. Oddly, whilst only 13% of Welsh tenants saw an increase in rents, they are facing the most competition for housing, with 46 tenants registered per member branch.
Tenants in the East of England are also facing fierce competition with an average of 45 house-hunters registered at each branch.
Supply in the rental market remains steady, with an average of 184 properties managed per member branch, which is the same as last month. The East Midlands boasts the highest level of supply, with an average of 269 properties per branch, whilst supply in London has dropped to an average of 122 per branch, down from 140 in January, increasing already intense competition in the capital.
David Cox, managing director of ARLA said: “The second ARLA Private Rented Sector Report findings reiterate that demand for rented accommodation is still on the increase, and monthly rents are following suit. When demand is high then the premium for a home increases; house prices are still sky high and are unlikely to reduce anytime soon, which means that getting onto the property ladder is a challenging and unlikely task for many, so renting a property is the only option available.”
ARLA letting agents are strongly against Labour’s proposal to introduce three-year tenancy agreements with rent controls and strict rules to make it more difficult to evict tenants.
Seven in 10 (70%) agents believe this would result in landlords pulling out of the market and creating a decrease in the supply of rental property, which would have detrimental effects on the industry. Just under half of agents (46%) argue that three-year tenancy agreements would cause them to lose flexibility over the duration of their tenancy agreements and more than two-thirds (69%) of ARLA agents think point blank that the proposal would not benefit tenants.
When it comes to building new homes to help kick start the property market, more than a third (37%) of ARLA agents believe that the Conservatives’ pledge to build 200,000 new starter homes would be the best policy.
A further one in 10 (11%) of agents believe Labour’s promise to boost house building rates to 200,000 a year by 2020 would be more beneficial for the sector. A further third (35%) were pessimistic about any changes, believing neither policy would be beneficial to the private rental sector.
“It will be interesting to see what happens in terms of the election – the property industry needs more homes, that is clear for whichever party comes into power. We are growing as a society, and our needs for housing have developed from what they may have been previously. We are concerned that government policy on housing, as it currently stands, cannot deliver on what is required to help the industry,” said Cox.