Signs suggest that rental prices in the Private Rental Sector (PRS) could be levelling out, according to letting agents.
Latest data from the Association of Residential Letting Agents (ARLA) shows that in the first quarter of this year, 50 per cent of its members reported increased achievable rent levels, in line with news of rising rents across the UK. However, the percentage of members reporting this has fallen from 60 per cent nine months ago, indicating that a downward trend is being established.
Over the same timeframe, the average void period – the length of time for which a rental property is un-tenanted – rose for the second successive quarter, to an average three weeks.
ARLA members also reported a decline in the number of new tenancies being signed, a factor which, although not unusual for this time of year, may also indicate decreasing demand from tenants, or be a reflection of their inability to afford the rents being charged.
It could equally be nothing more than the effect of tenants staying longer in their property
Tim Hyatt, ARLA President, said: ‘Our data suggests that things could be changing in the PRS as the amount being charged for rent is beginning to stabilise in some parts of the UK.
‘This could be due to a number of factors, including an increase in haggling forcing rent levels down.
‘Our members also report a decline in the number of properties coming onto the rental market because they can’t be sold, suggesting that the initial boom in reluctant landlords joining the PRS is coming to an end.
‘However we know anecdotally that this is by no means a consistent picture across the UK, as there is still a huge demand for rental property in some parts of the country. Ultimately, the key challenge of undersupply has not been solved and there is still a need to provide the right housing, in the right places, across the wider housing market.’
Leaders’ Southsea branch manager, Vanessa Potter added: ‘We are finding that many people are choosing to stay where they are at the moment – whether tenants or owner-occupiers – because budgets are tight and moving home is expensive.
‘This means fewer rental properties are becoming available to re-let and fewer new properties are coming onto the market from so-called reluctant landlords.
‘Following a period of rent rises, rents are now showing signs of stabilising as tenants are not able to afford much higher rents and sensible landlords do not want to risk losing good tenants for the sake of a small rent increase.
‘We are seeing average void periods of one to two weeks, which are very low and have been for some time.
‘Overall demand for rented accommodation is still very high and it remains a very favourable market for landlords.
‘We do not anticipate this changing, with the UK becoming more like Europe.
‘More people are choosing to rent for the long-term due to the high deposits required for buying, a greater need for job mobility, a decrease in job stability, and the desire for flexibility.
‘Rents may be showing signs of stabilising but they are still very strong and residential letting will remain an attractive proposition for investors for many years to come.’