With the introduction of the tenant fees ban through the Government’s Tenant Fees Act 2019, which became effective from the 1st of June, it was almost inevitable that agents would pass on their loss of fee income to their landlords, and that where they can, landlords will pass on these costs to their tenants.
And as landlords can no longer charge tenants for inventory checks on check-in or check-out, or add onto deposits an additional charge for pets’ damage, then these two items will inevitably also lead to rent increases in some cases.
So consequently, according to the RLA, the introduction of the Tenant Fees Bill has already seen rent hikes across the country, and according to the latest May PRS Report from ARLA Propertymark, the number of tenants experiencing rent hikes increased to the highest figure on record in May, with 45 per cent of agents witnessing landlords increasing rents. And the RLA says:
- Year-on-year, this figure is up 61 percentage points, from 27 per cent in May 2017, and 28 per cent in May 2018,
- In May, the number of tenants successfully negotiating rent reductions fell from 1.9 per cent in April to 1.6 per cent. This is the lowest figure seen since January 2016 when it stood at 1.5 per cent.
- The number of properties available to rent dropped marginally to 201 per member branch in May, from 202 in April.
- In contrast, demand from prospective tenants increased in May, with the number of house hunters registered per branch rising to 69 on average, compared to 64 in April.
- Year-on-year, demand is up 15 per cent, from 60 house hunters registered per branch in May 2018.
It also seems that less buy to let property investors are leaving the private rental sector, with letting agents seeing a slight decrease in the number of landlords selling their buy to let properties. The number of landlords exiting the market fell from five per branch in April, to four in May.
ARLA Propertymark Chief Executive, David Cox, has said:
“As predicted, last month’s findings have shown an increase in rent prices in advance of the Tenant Fees Act coming into force. This rise in the number of tenants experiencing rent hikes is the highest we’ve ever had recorded, and rents will likely continue to rise as they must now cover the agent’s legitimate costs for setting up a tenancy.”
“Competition for properties will be increasing as the supply of properties available to rent falls, but the demand from prospective tenants grows. This ultimately pushes up rent prices on well-managed properties and leaves tenants feeling the pinch.”
It seems that rent hikes could be the norm for the foreseeable future states the Residential Landlords’ Asociation (RLA).