Rents will Rise:
Dorian Gonsalves, Chief Operating Officer of Belvoir, predicts that residential rents will rise by 15% over the next three years.
“Agents nationwide have been predicting that rents are likely to rise considerably faster than house prices and Belvoir is forecasting that rents are likely to rise by up to 15% over the next three years,” he says.
“This rise in rents, which will of course vary from region to region, is primarily due to a raft of recent anti-landlord government policies in the past year, which include increasing stamp duty costs, introducing tougher mortgage lending criteria, and removing mortgage tax relief for landlords, which could see many landlords making a loss. In addition, the government’s failure to increase the availability of social housing for rent has resulted in a real shortage of good quality rental accommodation in the private rental sector.
“Although the Chancellor confirmed in his Autumn Statement that upfront tenant fees are to be banned, the full details have not yet been clarified and no timescale has been given. Until these details have been finalised, which could take many months, it will be very much business as usual for Belvoir, although our franchise owners will be looking at ways to ensure that their businesses are in the strongest possible position to enable them to adjust to the changes that lie ahead. We already have over half of the Belvoir network offering an estate agency service, and I predict that this number will grow considerably in the year ahead.
“Throughout 2017 Belvoir will continue to work with decision makers and we hope that some of the government’s recent changes will either be reversed or incentives will be launched to help drive up the supply of rental properties. This would then bring down rents and benefit millions of tenants, making for a healthier rental sector.
“Belvoir’s recent Q3 rental index revealed that 88% of offices had reported an increase in demand for houses to rent. Research shows that 86% of tenants – who make up about 6m households – had less than the £8,838 needed for a 5% deposit on the average home and are therefore unlikely to be able to buy a property.
“People from all walks of life, including students, migrant workers and professionals with families, are struggling to meet stringent lender affordability ratios. When someone is not in a position to buy, they obviously start looking for somewhere to rent, but unfortunately, government policies seem to lack any direction, and have done nothing to benefit either landlords or tenants, so tenants could find it more difficult to find good quality suitable accommodation in 2017 and beyond.
“I also think that a number of independent agents may seek to exit the market during the next year and Belvoir will be continuing its acquisition programme, looking for opportunities for our franchise owners to help them increase their market share.
“Belvoir has learned lot from our Scottish offices, where tenant fees are already banned. I predict that 2017 will be a year for agents to adapt and change, as the impact of the government’s recent anti-landlord policies take effect and the market readjusts.
“Belvoir is one of strongest and most successful franchise agency chains in the UK, winning Best Lettings Franchise of the Year at the Times and Sunday Times Lettings Agency of the Year Awards in 2016 for a record sixth year. We have always been at the forefront of good business practice and supportive of initiatives to improve customer service for landlords and tenants. I am confident that, by adopting a sensible and measured approach, Belvoir will quickly adjust to the changes that lie ahead and our offices can look forward to a successful year.”
Dorian Gonsalves is Chief Operating Officer and sits on the Board of The Property Ombudsman. Belvoir is recognised as the largest property franchise network on the High Street, with over 300 offices nationwide.