Rental Market Predictions 2019
With significant numbers of landlords selling up in the face of a rising tax and legislative burden, it is no surprise to find that supply levels are falling and prices are rising. At 1.5%, Homelet’s Rental Index shows rents in the UK grew at twice the rate in 2018 as they did in 2017 (0.7%), although they were still down from 2016 when rents rose by 3.1%. The biggest rise was in London (4.4%), followed by Northern Ireland (2.9%), Scotland ((2.4%) and the South West (2.1%).
David Cox, Chief Executive, ARLA Propertymark, says:
“The PRS has undergone a tsunami of change over the last few years, and there are difficult times ahead with the tenant fees ban expected to come into effect next year. With all the new legislation landlords have faced over the last few years, they have found themselves either being pushed out of the market or forced to pass rising costs on to tenants – a trend which we’ll continue to see next year.
“However, looking further ahead we firmly believe that the industry will come out stronger, more professional and better respected at the other side. The best landlords and agents will adapt and survive to the new circumstances, keeping the PRS afloat.”
65% of ARLA’s lettings agents believe rents will rise in 2019, up from 59% last year. 53% expect demand to continue rising and a whopping 78% are expecting the number of landlords in the private rental sector to fall.
Rightmove’s rental index paints a similar story of dwindling landlords and supply and rising prices. They claim stock levels have fallen by 8.7% over the last twelve months and by 19.4% in London. Approvals for BTL mortgages also fell by 14% but, perhaps more tellingly, BTL mortgage approvals were down by 53% compared to three years ago when the additional BTL stamp duty charges were introduced. It has led to increased competition between those searching for a new home to rent, especially in London, where properties now spend just 37 days on the market – that’s 4 days less than they did in 2017.
Rightmove’s Commercial Director and Housing Market Analyst Miles Shipside comments:
“There 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.”
As for the future of the rental market, he says,
“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.”
Most industry commentators are forecasting that rise to be around 2%.