28 September 2009
Demand in rental market returns for the first time since recession began
The residential rental market is beginning to stabilise with property oversupply decreasing across the UK and the number of new tenancies increasing, according to the Association of Residential Letting Agents (ARLA).
Results from the latest ARLA survey of its members show that the historical decline in numbers of tenants, which led to a surplus of properties to rent, is coming to an end.
83% of ARLA members signed up 10 or more tenancies during the last quarter, compared to 79% last quarter. Each member signed up an average of 36 new tenancies, compared with 32.6 last quarter.
Almost a third of members (33%) surveyed felt that supply and demand of properties is in balance; this compares with just 19% last quarter. Ian Potter, Operations Manager of ARLA, said: “This shift in the balance of supply and demand is extremely significant for the private rented sector. It gives further evidence to suggest that the property market as a whole is getting back on its feet.
“This shift also indicates that confidence is rising among prospective tenants; it seems that people who delayed setting up home 12 months ago, now feel secure enough to proceed. Equally, those who historically have shared a rental property seem happy to set out independently.”
In addition, the number of members who believe that there are more residential properties available for rent than there are tenants to fill them dropped significantly in the three month period, from 70% to 43%. The number who say that there are more tenants than properties has risen from 10% to 24%.
The situation is particularly significant in the rest of the South East, where three times as many members said that there are more tenants than properties (27% compared with 9% last quarter).
“This recovery of sorts is still in its infancy and needs as much support as the Government can muster. As we have stated repeatedly, a healthy private rental sector is the only way in which the Government can hope to house future generations. Accordingly, the Government must do all it can to nurture the recovery of the PRS including the implementation of meaningful consumer protection measures,” Mr Potter added.
Historically, tenancy rose across all regions of the UK until the recession hit, when properties became harder to let and supply outweighed demand. This trend was felt hardest from late 2008 and into early 2009.
This latest ARLA research also showed that the average void period of a rental home has dropped for the first time in more than a year, indicating that properties are being rented more quickly.
In the winter of 2008 the average length of time for a property to remain empty was 3.8 weeks across the UK, yet by May 2009 this had risen to 4.3 weeks as homes became harder to rent. Now, the figure has dropped to an average 4 weeks (and 3.8 in the South East), giving further indication that the rental property market is picking up.
The data from the third quarter of the ARLA Members’ Survey of the Private Rented Sector is drawn from 639 offices. The survey is supported by mortgage lenders Mortgage Express and Paragon Mortgages. Together with the Survey of landlords, this forms part of the quarterly ARLA Review and Index. All surveys and statistics can be downloaded from www.arla.co.uk.
