Landlords are raising rents after being hit by the buy-to-let clampdown in their tax bills.
ONS data shows rents rose 0.9% in the 12 months to May 2019, the highest annual growth since September 2017.
Across the UK, tenants saw rents rise 1.3% annually in May, up from 1.2% a month before.
Northern Ireland had the highest annual growth rate at 2.1%.
In England, private rental prices grew by 1.3% in the 12 months to May 2019, up from 1.2% in April 2019.
Rents grew by 1.1% annually in Wales, unchanged since February 2019, and Scotland saw a 0.8% increase, up from 0.7% previously.
Commenting on the figures, Kate Davies, executive director of the Intermediary Mortgage Lenders Association (IMLA), said: “After filing their 2017-18 tax returns, landlords are becoming more aware that ongoing changes to mortgage interest tax relief are increasing the financial challenges facing them.
“This is leading more property investors to reconsider their options and the pressure on some to increase rental prices will be mounting. We do not see it as a coincidence that several rental indices show that, following a protracted period of softness, average rents in London are once again increasing.
“Despite the current political and economic uncertainty, we hope a change in leadership will be seen as an opportunity for the Government to demonstrate its support for landlords, which goes hand-in-hand with helping people get on the property ladder.
“Growing pressure on landlords to increase rents in order to make ends meet will ultimately have a detrimental effect on renters’ ability to save for deposits to buy their own homes.
“The Government should be careful to ensure that any future regulation around the private rental market does not further shrink the appetite of private landlords to satisfy the growing demand of tenants.”
So rents are actually falling, in real terms. So as we all knew would happen, BTLers are actually absorbing any additional taxes out of there profits.
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I have a feeling these figures will be vastly different once a lot of the one and two property landlords suddenly realise by how much they are going to be out of pocket and have to catch up by increasing the rents even more, with the added costs of absorbing the TFB, lets hope someone can bring it under control before it sky rockets!
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Well that’s certainly putting a positive spin on things James which isn’t like you at all. A few points you may care to consider further…
1. The rate of increase is accelerating.
2. Effects usually lag cause so you can probably expect the rate of acceleration to increase. I, like most full-time landlords, had a policy never to increase rents on sitting tenants and still do have some that have been with me for more than a decade without a rent rise. The policy has of course had to change. I decided yesterday to lift rent to one tenant by 5% and they’ll get the letter in the next couple of days. If they remain at the house they’ll get a similar letter this time next year and they’ll still be way below market rate. Indeed I offered this house along with another for sale to a big corporate landlord last week and because the rent on this place was so low I was told that they would only buy it if I evicted the tenant! This has helped me to come to the decision that rents must rise.
3. I know of lots of houses being sold by landlords. Some will go to other landlords, many will not. Less rental stock means rents will rise even faster. That also means the poorer members of society will add to the statistics of homelessness. That I’m sure will add to your glee.
4. It’s interesting to note that you feel landlords are doing their best to absorb the tax changes, when you constantly harp on about how greedy we are. Clearly you’re confusing yourself a bit.
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Miniscule rent rises here, less than inflation and saying the two are linked is a joke. Some actual journalism here would he good.
Even ARLA’s own commissioned research didn’t conclude rents would rise to fully cover the cost for most tenants, and that was based off a finger in the air 50% share.
The industry just keeps crying wolf and I don’t understand why the media doesn’t challenge it.
I’m sure someone will tell me some anecdote about rents rising because of it, but the plural of a anecdotes ain’t statistics.
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Rents are rising in my area by 3% because I just put them up to justify my 2% management fee increase! What the hell do you expect Agents to do? The legislation has increased exponentially over the last 5-6 years increasing agents time and hitting profits. TFB was introduced to save tenants money. Neither of these policies were ever going to work -but they may have got a few votes.
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I expect agents to charge the maximum the market can bear.
Unless you’ve cornered the local market, that was all you ever could do.
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Poor James seems slightly confused. Landlords are paying taxes on profits so they are not absorbing them; the profits are falling as is the tax take for the treasury. Fall in profitability, rising expenses and unnecessary government interference = reduced supply, reduced investment and decrease in supply with eventual re-balancing of the market rents. Property is a slow long term investment with high liquidation costs so changes are slow to be implemented and show through. Fact is the rapid changes the Government keep bashing landlords with will takes time to come out in the wash. Eg the relatively sudden movement of many eastern europeans move back to mainland europe due to brexit and reduced exchange rates will impact on useable supply whilst the Government and others who wordship statistics are out of date and basing their decisions on historic data.
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Irony at its best (the rule of unintentional consequences):
Government concerned that tenants are being ripped off by agents – Solution: TFB legislation, ban fees and refund deposits over 5 weeks.
Agent loses tenant fees – Solution: increase LL’s fees to retain profitability.
Landlord loses profit – Solution: increase rent
Tenant gets a partial refund of his deposit hurrah! and then pays rent increase with it!
In reality, had the government introduced law whereby any over-payment in deposit over 5 weeks rent had been paid direct to the Agent, it would have been a lot easier and in fact cheaper for tenants in the long run.
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I cannot quite work out the thought that just by increasing rent prices that tenants are going to pay? Tenants are already squeezed and in my opinion will just make different choices in terms of location.
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Sorry did I confuse you? if the rents increase then tenants will have to pay. I don’t think I’m the only agent increasing fees/rents
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‘if the rents increase then tenants will have to pay’ – yeah not strictly true they do have a choice.
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You are right, they can move to somewhere cheaper but eventually all the cheaper rents will be taken and all rents will increase. Then the tenants will pay or they could buy their own homes
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And as tenants move into other areas the overpriced stock sticks on the market until it eventually comes down to where it should be in a prevailing market – agents cant just up rent and expect market sentiment to agree with the increases.
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Or, Blondie….the landlord whose property sticks sells up and as supply dwindles and demand remains constant what happens then? Er, rents go up. Tenants are ultimately going to pick up the bill until such time as the Government’s war of attrition does away with the PRS in its entirety and would be tenants continue to live with their Mums and Dads until they’re 56.
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and that sir is exactly why councils are being tasked to buy hundreds of homes every year to service tenants not exclusive to DSS
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