Demand is outstripping supply in the UK residential rental market, aggravated by the shortage of homes for sale on the market. The recent capital gains tax hike is one factor discouraging landlord investment, impeding housing recovery and leading to record low rental inventory. See the following article from Property Wire for more on this.
The residential property rental supply in the UK has reached an all time low making the prospect of a severe shortage more likely, according to the industry.
New research from the Association of Residential Lettings Agents (ARLA) shows that almost three quarters, 70%, of its member offices report that there are more tenants than available properties. This is an increase from 59% in the first quarter of 2010.
The situation is worst in the South East where 76% of member offices report more tenants than properties.
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‘The spring period would usually see a rise in rental properties coming onto the market, and although there is some evidence of landlords considering selling up, it is not enough to counteract the change in supply,’ said Ian Potter, operations manager of ARLA.
‘This situation has been deteriorating rapidly in recent months, as the supply and demand of homes to buy is also swinging out of kilter making the prospect of a severe rental housing shortage ever more likely,’ he added.
Potter believes that the Chancellor George Osborne did little to incentivize investment in the Private Rented Sector in his recent emergency Budget. ‘In fact, the rise in Capital Gains Tax may actually discourage potential landlords from investing. This, combined with low construction levels and the cap on housing benefits, means that instead of the housing market getting back on its feet, what we may soon see is people going without homes they can afford, something that simply should not be allowed to happen,’ he explained.
Compared with three months ago, the average void period has again fallen, this time from 25 days to 22 days, the lowest it has been over the last eight years, and the average number of new tenancies signed up in the preceding three months increased very slightly in line with seasonal trends. On average, ARLA member offices say that tenants remain in the same property for a period of 17.9 months, up from 17.2 months in the first quarter of the year.
The research also shows that for the fifth quarter in succession, a substantially reduced proportion of ARLA member offices, 18%, down from 27% in the first quarter of 2010 and from 94% 15 months ago, believe that they are seeing an increase in rental property coming onto the market because it cannot be sold.
Most landlords are not expecting to sell their properties in the next 12 months. Some 76% will be sticking with their portfolios but a small minority of 13% said they did have such expectations with a further 10% unsure whether they would be selling any properties in the next 12 months or not. Compared with three months ago, the proportion saying they DO intend to sell some or all of their properties in the next 12 months has risen from 11% to 13%, whilst the proportions saying they do not or that they are not sure have fallen to compensate for this increase.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.