New report says rents could be levelling out
4:00pm Thursday 17th May 2012
Signs suggest that rents, which have been rising steadily, could be levelling out.
But although rental prices may have peaked, demand for rented accommodation is still very high in the Sutton and Epsom area.
Jackie Parsons, branch manager of Leaders in Sutton, said: “Overall demand for rented accommodation is still very high – especially for family homes in areas where the state primary schools are of a high standard – and it remains a very favourable market for landlords.
“We do not anticipate this changing. More people are choosing to rent for the long-term due to the high deposits required for buying, a greater need for job mobility, a decrease in job stability, and the desire for flexibility.
“Rents may be showing signs of stabilising but they are still very strong and residential letting will remain an attractive proposition for investors for many years to come,” she said.
Rents could be stabilising as tenants are not able to afford much higher rents and sensible landlords do not want to risk losing good tenants for the sake of a small rent increase, she explained.
“We are finding that many people are choosing to stay where they are at the moment – whether tenants or owner-occupiers – because budgets are tight and moving home is expensive.
“This means fewer rental properties are becoming available to re-let and fewer new properties are coming onto the market from so-called reluctant landlords.”
The latest data from the Association of Residential Letting Agents (ARLA) shows that in the first quarter of this year, 50 per cent of its members reported increased achievable rent levels, in line with news of rising rents across the UK.
The percentage of members reporting this has fallen from 60 per cent nine months ago, indicating, says the association, a downward trend is being established in some parts of the UK.
Over the same timeframe, the average void period – the length of time for which a rental property is un-tenanted – rose for the second successive quarter, to an average of three weeks.
ARLA members also reported a decline in the number of new tenancies being signed, a factor which, although not unusual for this time of year, may also indicate decreasing demand from tenants, or be a reflection of their inability to afford the rents being charged. It could equally be nothing more than the effect of tenants staying longer in their property.
Tim Hyatt, ARLA president, said: “Our data suggests that things could be changing in the private rented sector as the amount being charged for rent is beginning to stabilise in some parts of the UK.
“This could be due to a number of factors, including an increase in haggling, forcing rent levels down.
“Our members also report a decline in the number of properties coming onto the rental market because they can’t be sold, suggesting that the initial boom in ‘reluctant landlords’ joining the private rented sector is coming to an end. This is by no means a consistent picture across the UK, as there is still a huge demand for rental property in some parts of the country.”