Asking rents reach record high as demand rises in private rented sector
Demand from tenants looking for a new home in the UK increased 7% between May and June, an uplift seven times bigger when compared to the previous four year average of just 1% at this time of year, the latest index shows.
In London there was a 13% increase in demand from May to June, compared to a four year average of 4%, according to the rental tracker index from property portal Rightmove.
The data also shows that nationally, excluding London, asking rents are at a record high of £817 per month, up 2.7% on a year ago as rents continue with a steady annual rise. In Greater London rents increased by 3% to £2,059.
A breakdown of the figures shows that asking rents increased by 5.9% year on year in Scotland to £714, by 1.4% in the North East to £567, by 4.4 % in the North West to £689, by 2.5% in Yorkshire and the Humber to £617 and by 2.6% in Wales to £660.
In the West Midlands they increased by 2.4% to £702, in the East Midlands by 2.8% to 654, in the East of England by just 0.8% to 930, in the South West by 3.9% to £829, and in the South East by 1.7% to £1,101.
The report suggests that people were looking to move earlier than the usual peak at the end of July due to the tenant fees ban being introduced in England and now letting agents are reporting an increase in enquiries from tenants looking to move now that the legislation is in place.
The report points out that there will also be some who have been given a new impetus to move by the removal of most tenant fees, giving them a saving of hundreds of pounds in some cases.
It also points out that the rental stock shortage of the last few years, along with this increase in demand, means tenants are likely to find the next few months more challenging to find the right property for them.
‘A spike in tenants looking for a new place to live indicates some unsurprisingly held out until fees to start a new tenancy were removed by the government at the start of June. The ongoing shortage of quality stock could end up being exacerbated further by landlords whose tenants are now giving their notice so they can move on without paying fees, and some of those landlords then choosing to sell up rather than let it out again,’ said Rightmove’s commercial director and housing market analyst Miles Shipside.
.Asking rents are at a new record, rising at nearly 3% a year as demand for quality properties outstrips supply. However, the rise in rental prices may also mean some agents or landlords have attempted to raise rents to help compensate for a loss of tenant fees. More build to rent developments with more premium offerings and rents could also be adding to the average increase,’ he added.
Melanie Howarth, branch manager at Northwood in Doncaster, said that the agency has seen a massive increase in enquiries. ‘I’d say every property is seeing double, maybe triple, the levels of interest that it would have received prior to the tenant fee ban being introduced as it’s now cheaper for tenants to move around from property to property,’ she explained.
Richard Davies, head of lettings at Chestertons, said it has seen a 17% increase in the number of tenants registering to view properties since the tenant fee ban came in on the 01 June compared to the same time last year. ‘This spike in demand from tenants has meant that there has been a lot more competition for rental properties, and tenants are often paying above asking price to secure their first choice property,’ he pointed out.
‘Paying over asking price for rental properties in the peak summer lettings season is not too unusual in London, but we have noticed that tenants are more prepared to do so since the fee ban came in, potentially because they feel they are saving money on additional fees so can afford to spend a little more on their monthly rent to secure the right property,’ he added.