Estate agents seem to be putting up rents, according to the Association of Residential Letting Agents (ARLA). ARLA has reported that between May and June, more than a third (36%) of member letting agents reported a rent rise – the highest number on record.
This revelation forms part of ARLA's latest Private Rented Sector Report. The report drew on data gathered by ARLA from 363 of its member agents between 2nd and 16th July.
The highest concentration of rent increases was found in the East Midlands. Nearly half (48%) of ARLA member agents in this region reported a rise in rent levels. The lowest rate of rent increases, by contrast, was in Wales where only 17% of letting agents put monthly rental costs up.
ARLA's managing director, David Cox, believes that the increase in rents has been triggered by the announcement by Chancellor George Osborne that landlords will see reductions in their tax relief. Cox believes that these measures, which were announced as part of Chancellor's recent emergency budget, “will affect the cost of renting over the coming months and is likely to mean it will take even longer to see any improvement in affordability in the private rented sector.”
However, if the recent rent increases are indeed a result of the reduction in tax relief, specifically mortgage interest relief, that buy-to-let investors can claim then the response seems rather pre-emptive. These changes are not due to come into effect for another two years, and this fact was reported to investors at the time the budget was given.
One pertinent question – and one which the report seems unable to answer – is that of whether these rent increases are coming primarily from landlords or from letting agents. An ARLA spokesperson, when asked if there were unilateral efforts on the part of letting agents to push rents upwards, said that there is simply “no data to prove or disprove if it is the letting agents or the landlords putting up the rent.” The view of this spokesperson, and presumably of ARLA, however is that “it is probably a combination of the two.”
While the record number of rent increases is perhaps the most interesting and significant piece of information contained within the report, ARLA's research also led to a number of other interesting findings. Closely related to the recent rent increase, four fifths of agents surveyed predicted that the next five years will see rents continue to increase.
A number of conclusions unrelated to rent levels were also drawn from the data. There was, for instance, a slight shift in the supply of private residential properties available to rent. ARLA members managed an average of 179 properties per branch in May, but only 178 in June. A third of ARLA's agents said that June saw them receive an increased number of enquiries relating to short term lets. The average amount of time that properties spent empty between tenancies in June, according to ARLA members, was three weeks.