Despite ongoing uncertainty following the Brexit vote and recent stamp duty increase, the private rental market ‘continues to thrive’, according to letting agency Belvoir.
But the company’s chief operating officer, Dorian Gonsalves, fears that the situation could rapidly change unless the government rethinks its plans to reclassifying mortgage interest relief as anything other than a normal business expense, and introduce measures that will help boost the supply of much needed rental homes on the market.
“If there is no reversal in government policy with regards to mortgage relief taxation, and no measures are introduced to increase the supply of rental properties then landlords are likely to come under increasing pressure to raise rents,” said Gonsalves.
“If they [landlords] subsequently start selling off properties, this will clearly have a negative effect on the availability of good quality accommodation. We await the chancellor’s Autumn Statement on 23rd November with great interest,” he added.
Belvoir report that rents in Q3 rose marginally, with plenty more room for growth on the back of increasing demand from tenants.
A glance at the data relating to tenant demand shows that 88% of Belvoir offices reported an increase in demand for houses and 63.5% of offices reported an increase in demand for flats, while the majority of Belvoir franchise owners expect to see tenant demand increase further in Q4.
As far as rental price movements are concerned, Belvoir agents do not anticipate a major change in the run-up to Christmas, which is understandable as we enter the traditionally quiet festive season.
Gonsalves continued: “Historically Q2 and Q3 tend to show an increase and Q4 tends to be when there might be a decrease, as landlords don’t want properties to be left vacant at this time of year and so it is an opportunity for tenants to pick up a bargain.
“Two to three bedroom houses remain top of the list for stock shortages, with 81% of offices reporting a shortage of three-bed semi-terraced houses, 68% reporting a shortage of three-bed detached homes and 66.5% of offices reporting a shortage of two-bed houses.”
“Our analysis of rental periods in Q3 versus Q2, showed that almost half of franchise owners [46.3%] reported that the average time for tenants to rent was 13-18 months, and over a quarter [27.78%] reported the average time in a rental property was over two years,” he added.