Average asking rents in Britain outside of London have reached over £800 per month for the first time, fuelled by fewer available rental properties for prospective tenants to choose from.
The latest research from property portal Rightmove shows that rents increased by 0.8% in the third quarter of 2018, the biggest jump recorded at this time of year since 2015.
But, at the same time there are 8.7% fewer rental properties marked available compared to this time last year and in London the number of available rental properties is down by 19.4%, with agents finding tenants four days quicker for landlords’ properties than a year ago
Rightmove says that the continuing trend of fewer landlords purchasing buy to let properties has led to record high rents and a lack of available rental properties this quarter, increasing competition among many prospective tenants looking for the right home.
It adds, that another factor for the lack of rental stock 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.
‘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,’ said Rightmove’s commercial director and housing market analyst Miles Shipside.
‘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,’ he added.
The research also shows that it is 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. 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.
Scotland performed best for growth in the third, with a 2.8% increase in asking rents leading to an annual growth rate of 3.8%. Both Stirling and Hamilton made it into the top five areas around Britain for demand.
Others included areas in the North West such as Ashton-Under-Lyne, Oldham, and Bootle. Glasgow made the top five for the highest growth in asking rents, now running at 5.1% higher than this time last year.
‘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,’ Shipside explained.
‘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,’ he pointed out.
‘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,’ he added.