A record number of landlords are now exiting the market, letting agents say.
The ARLA Propertymark Private Rented Sector Report shows that the number of landlords exiting the market rose to five per branch in April, up from four in March, the highest since the data started being recorded in 2015.
The figure had risen for the first time in March after sitting at three landlords consistently since April 2017.
The number of prospective tenants registered per member branch also rose, from 66 to 72 between March and April, the strongest demand since September 2017 when there 79 registered per branch.
However, supply was flat at 179 properties on average per branch.
In comparison, in April 2017 agents managed a similar 185 per branch but in April 2016 they managed 185, and 193 were recorded in 2015.
The research also showed the number of tenants experiencing rent hikes increased to 26% in April – the highest since September 2017 when 27% of landlords put rents up for tenants.
This was up 24% year-on-year.
David Cox, chief executive of ARLA Propertymark, said: “The barrage of legislative changes landlords have faced over the past few years, combined with political uncertainty, has meant the buy-to-let market is becoming increasingly unattractive to investors.
“Landlords are either hiking rents for tenants or choosing to exit the market altogether to avoid facing the increased costs incurred. This in turn is hitting renters most, at a time when a huge number of people rely on the rented sector, and leaves us with the question of where will these people find alternative homes?
“As demand for private rented homes massively continues to outstrip supply, the Government can no longer divert its attention from the broken housing market.
“The recent news that the Government is regulating the industry is a step in the right direction, but ultimately we just need more homes.”
As a letting agent myself, with all the changes my landlords have had to face, rents had already started rising however since the talks of a tenant fee ban, my charges to all landlords have risen by 2%, I’m doing this with every new let, the property is then being advertised at a higher rent to recover some of my landlords expenses. The tenants will be paying higher rents. My job as a letting agent to my landlords is to make sure they are maximising their investments and that my tenants are getting the best property and service for their money. This is getting harder to do!
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Out of curiosity, do you plan on increasing charges to existing landlords as well?
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That was the intention; in 2005 it became obvious that any investment in BTL was better that allowing others to manage investments such as pension pots. I remember a discussion I had with the Prudential who were charging me a modest fee that became disproportionality huge when compared with the yield they were achieving and all the restrictions and hoops I had to access my own money.
BTL is a house price indexed investment that gives yield better than similar risk managed funds. If you suddenly have need for a large lump usually it could be in the bank in 3 months time. There might have been tax implications but those were nothing as punitive as the fund managers were taking for performing worse than a web saver account at the building society.
BTL has stopped the flow of property into the market, where couples moving in together would have traditionally sold one of their properties it was retained and kept on to provide income and investment. Deceased estate properties were retained in the family and got rented out for the same reason.
Starving the market of available properties isn’t good for those who aspire to own a home, the properties they could afford were those being snuffled up by BTL investors and a reduction of end of chain properties BTL has stalled the sales market and made prices artificially high.
It is going to be interesting to see what happens next, I personally think that while interest rates remain low there will be a knee jerk exit by some landlords that will benefit not ftb as intended but professional property investors who will continue to expand their portfolios.
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