Rental Undersupply Issue Persisting

Wednesday, July 13, 2011

Rental Undersupply Issue Persisting

According to latest ARLA research into the private rented sector

An undersupply of good quality property is threatening the UK rental market according to ARLA, as its research reveals that the imbalance of supply and demand is continuing.

According to ARLA research out today, during Q2 2011 three quarters (74%) of members reported that there were more prospective tenants than properties available - a figure that jumps to 82% in central London.

By comparison, just two years ago the number of members reporting an undersupply of rental homes in the UK was 10%, and 8% in central London.

Ian Potter, operations manager of ARLA, said: "As many parties are reporting, there is a clear shortage of homes to buy in the UK. Faced with this, many people are turning to rental homes as a more flexible option than buying; yet as our research highlights that the dearth of properties is just as real in the private rented sector (PRS), and is showing no signs of improvement.

"To work towards a solution, Government needs to look seriously at ways of incentivising investment into the PRS to increase the number of properties available for rent. At the same time, it needs to look at ways of regulating what is becoming an increasingly popular housing option, so that consumers and landlords are protected from issues such as loss of rent monies and deposits as well as defaults on mortgage and rental payments."

The ARLA member survey covering Q2 2011 also revealed a slight increase in buying and selling activity among landlords - 16% of agents believe landlords are buying properties, up from just 9.3 per cent a year ago. Some 14% believe landlords are selling properties, compared with 25% a year ago. 

• Devon and South Somerset

Philip Keddie, Owner, Sunshine Rentals, Devon:

"Consistent with the national trend, certain parts of the area have hardly any new properties to offer to a growing number of tenants. It is increasingly noticeable that the market is dividing into three types of tenant category, those on part or full housing benefit, first time buyers renting instead of buying and longer term tenants who are waiting for the sales market to turn. Similarly, there are precious few new landlords looking to add or start a portfolio as they also believe house prises have yet to fall.

"Of concern is a noticeable number of long term landlords who are older, who are preferring to release their equity in the property market and are selling existing rental properties which in turn is putting more people onto an already strained rental market."

• East Midlands

Adrian Wray, Director, Bradgate Property Management,Leicestershire

"This is definitely a trend we are experiencing across the East Midlands with the lack of quality properties being made available through licensed agents. The rental properties available are often offered through unlicensed lettings agents, so we would urge prospective tenants or landlords to research their agent carefully, or else risk an unprofessional service."

• Hampshire

Valerie Bannister, National Property Director of Your Move Lettings in Southampton

"New stock remains a challenge in the Hampshire area - however there are pockets of buy-to-let landlords still investing. Rents are at a level which reflects that demand is exceeding supply and family houses in particular are in demand. Typically in some areas a three-bedroom house will now achieve£ 1/1200 a month.

"Those tenants who can find a property are typically remaining in occupancy for longer periods. With comparable rents increasing and the cost to move factored in, tenants prefer to remain in their existing rented accommodation."

• Scotland

Fiona Docherty, Managing Director, Ryden Lettings, Edinburgh and Glasgow:

" Both Glasgow and Edinburgh are displaying  high levels of  tenant demand and there is a shortage of good new stock coming onto the rental market.  Demand is really covering the spectrum from one bed flats up to family homes with gardens.  There is no indication of this demand weakening."

• South West

Debbie Vowles, Area Manager, Andrews Letting & Management, Bristol and Bath:

"We are seeing an average seven prospective tenants for every rental property available, and even more for three and four-bedroom family properties.  Those properties are flying off the shelf so we would advise any landlords looking to invest in a rental property in the South West, now may be a good time - but, as ever, it is important to conduct thorough research to ensure you are getting value for money."

• West London

Susan Fitz-Gibbon, Director, Fitz-Gibbon Limited, West London:

"Due to demand outstripping supply rents are increasing and across the West London area we are witnessing rents increasing by some 12% and sometimes more. Tenants are staying put and many are extending existing tenancies."

The ARLA Review and Index is available at: http://www.arla.co.uk/buy-to-let/buy-to-let-review/2011/q2/