The Rental Market - Supply and Demand
With house prices still out of the reach of many people the rental market is facing increased demand. This ought to be a propitious time for the rental market, and landlords still believe that the current climate remains a good time to invest in buy-to-let property. According to research from the National Landlords Association well over half of those asked believed that it was a good time to make further investment in property to rent out. First-time buyers put off by house prices and mortgage rates, single professionals, and increasingly older people, are making up the demand for rental properties.
Conversely, for prospective tenants the picture is a little less rosy. Evidence from Sequence suggests there are now 7 prospective tenants for every rental property, with demand growing by 18 per cent during July of this year on an annual basis, and 7 per cent against the figure for June. In terms of prices the average rental property
outside of London was worth £697 per month in July, up from £670 in the same month last year.
Moreover, evidence released by the Association of Residential Letting Agents (ARLA) shows that as demand for rental properties has increased the number of available properties has, in fact, gone the other way, despite
landlords being sanguine about the prospect of making successful investments.
In the ARLA third quarterly report it was found that 68 per cent of all respondents had found there to be more prospective tenants than rental properties available – a figure that represents a major increase from the 59 per cent reported in the second quarter of this year, and a huge increase relative to the Q3 figure of 2013 when only 46 per cent reported more prospective tenants than properties.
Similarly the supply of properties was down in the third quarter by 6 per cent according to ARLA-registered agents, with the average number of available properties for each agent dropping from 143 in the second quarter to 135. The number of landlords selling off their rental properties also exceeded the number of new investments being made for the purpose of buy-to-let for the first time in 4 years: the number of landlords investing in new properties dropped by 8 per cent across the third quarter, with the number selling off rental properties rising by 5 per cent.
Altogether this makes for a hugely competitive market for those looking to rent – although the ARLA report did reveal an encouraging development, as the number of tenants carrying out checks on the reliability and integrity of their prospective landlords was found to have increased. The number of tenants requesting references from letting agents for their new landlords was up by 2 per cent, a positive sign as we push for a fully regulated private rented sector and a public well-informed about making the requisite checks before committing to a rental