Rightmove data shows that a continuing trend of fewer property investors purchasing buy-to-let properties is leading to “record high rents” and a lack of available rental properties, which is “increasing competition among many prospective tenants looking for the right home.”
Figures on their online portal between October and December 2018 show that rental listings are down by 22% over the previous 12 months in London, and have fallen by an average of around 10% outside the capital.
According to Rightmove data, the average asking rent of a home outside London on Q3 2018 surpassed £800 for the first time, up to £802 per month in the third quarter of 2018. And available stock numbers have dropped by 8.7%, which has been exacerbated by a 19.4% fall in London.
A major factor in the rental stock drought is the drop in new buy-to-let mortgage approvals, down 14% compared to a year ago and by 53% compared to three years ago, prior to the extra stamp duty surcharges on second homes and other anti-landlord tax measures.
Rightmove’s Commercial Director and Housing Market Analyst Miles Shipside has said:
“Rental demand is currently outstripping supply in many locations, especially in the capital. The exit of more landlords from the buy-to-let market in recent years has been due to a raft of different factors, from the more onerous tax regime and more stringent borrowing criteria, to the higher stamp duty on second home purchases and extra legal obligations.
“What we’re left with is a lack of available homes for tenants looking to find their next place to rent, meaning that when the right kind of property does come along it isn’t sticking around for very long before it’s snapped up.”
It’s now four days quicker than this time last year for a rental property to be marked ‘let agreed’ in London, down from 41 days to 37 days says the leading online property portal. The majority of other regions are yet to see lower available stock translate through to a quicker time to let, with the national average of 35 days remaining the same as this time last year, they say.
Mr Shipside goes on top say:
“Although some of the shortfall in supply will be met by quality housing provided by Build-to-Rent schemes in the coming years, it’s likely stock shortages will remain in areas with a high concentration of renters. Given this backdrop and rents likely to rise, private landlords should try and look beyond the current challenges if they can and stay in the sector.
“If they concentrate on improving the spec of their existing properties and buy better quality accommodation to add to their portfolios, tenant demand should steadily improve rental yields. Long term security is important too so see if landlords are open to negotiating a longer tenancy, perhaps with inflation only increases, as many will be keen to keep good tenants.”