PRS REPORT: Demand for rental accommodation reached a record high in January, however, supply of rental stock fell to the lowest level we've recorded in seven months. This has unsurprisingly had an impact on rents with 42 per cent of agents witnessing rent increases.
Demand from tenants
Demand from prospective tenants in January increased to the highest level on record with 88 prospective tenants registered per branch compared to 56 the previous month.
This means that agents have witnessed a 57 per cent increase in the number of prospective tenants registered since December.
Year-on-year, demand for rental accommodation has increased by a fifth (21 per cent), rising from 73 in January 2019 to 88.
Supply of rental stock
However, the number of properties managed per branch fell from 206 in December to 191 in January.
Supply has not been this low since July last year when it stood at 184.
Year-on-year supply is down from 197 in January 2019, but up from 184 in January 2018.
Rent prices
The number of tenants experiencing rent increases rose in January, with 42 per cent of letting agents witnessing landlords increasing them, compared to 32 per cent in December last year.
Year-on-year, this figure is up from 26 per cent in January 2019, and 19 per cent in January 2018 [Figure 1].
This month’s results are a huge blow for tenants. With demand increasing by more than half, but rental supply falling, rent costs are unsurprisingly being pushed up. Our recent research found that tenants could miss out on nearly half a million properties as more landlords exit the traditional private rented sector and turn towards short-term lets which will only serve to worsen the problem for those seeking longer term rental accommodation.
With the Spring Budget around the corner, it’s important that the Government works to make the private rented sector attractive to landlords again, rather than introducing complex legislation which ultimately squeezes the sector and leaves tenants worse off.
It is clear from member sentiment, that economic uncertainty, and interest rates in particular, are continuing to weigh on the commercial property market. Supply and demand imbalances continue in key sectors, suggesting that there will be a challenging start to 2024.
For the last quarter of 2023 in the property auction sector, catalogue numbers continued to grow substantially, although high numbers of properties continue to be withdrawn before auction. In the commercial auction sector sales and instructions are experiencing a notable surge propelled by corporate insolvencies spanning various sectors. In the goods, chattels, and fine art sector there continues to be a plentiful supply of buyers to create competitive open market bidding in all sectors.
In the residential sales sector, demand has temporarily slowed following the January post-Christmas bounce. Rents continue to fluctuate by location and property type, although there are some signs of stabilisation. As we progress into March and beyond, the re-establishment of seasonal trends should result in positive progress in both the sales and lettings sectors.
In this report, we share insights into the Renters (Reform) Bill from the perspective of landlords, which was obtained via Propertymark letting agent members' landlords. If the Bill is implemented, landlords whose properties are managed by Propertymark member agents will receive professional support to assist with implementation and compliance. However, it remains to be seen if the UK Government plan to provide further guidance, and whether it is sufficient to support self-managing landlords.