Private landlords are being forced to offset their significantly higher running costs on to tenants following recent tax changes.
Nearly a third (31 per cent) of letting agents noted that rents rose for tenants during July, according to the latest figures from the Association of Residential Letting Agents (ARLA Propertymark). This marks an increase on the 27 per cent seen in May.
Whilst these figures have remained stable on a monthly basis, there is marked growth in comparison to the 28 per cent of agents who saw a rise in rents in July last year.
As a result of the recent tax changes, private landlords are facing growing costs. This has forced many to make the decision as to whether to offset these on to tenants, or whether to consider leaving the buy to let sector altogether. Should significant numbers of investors opt to leave the market, there will be a sizeable reduction in available rented housing stock. This will contribute towards the current supply-demand imbalance in the market, and ultimately also lead towards higher rents for consumers.
The research also found that the number of properties managed per member branch also saw a slight increase in July to 192. This is up from 190 in June. Demand from prospective new tenants also saw growth in July, reaching 70, from 61 in June.
ARLA Propertymark chief executive, David Cox, commented: ‘Landlords really are stuck between a rock and a hard place. All the tax increases they’ve incurred over the last 18 months have meant they either need to sell their properties and exit the market, or increase rent payments to plug the deficit. Neither of these outcomes benefit tenants; if they exit the market, supply is even more strained and matched with growing demand, rent prices will increase anyway. Government may claim they are helping tenants but the unintended consequences of their actions on the private rental sector are now really being felt by tenants in terms of lack of homes to choose from and the feeling of being constantly priced out of the market. This needs to change.’