The lettings market: snapshot & forecast
The current lettings sector is a game of two halves – one that is constant, almost predictable, and another that is continually changing. When the two are combined, they create a challenging industry where only the most nimble and flexible agents will thrive. Let’s start with the constants.
Tenant numbers are growing
There is a sustained demand for rental accommodation, with Knight Frank confirming in its 2017 Tenant Survey that the proportion of households living in the private rented sector had doubled in the last 10 years. It’s a trend set to continue, with the agent forecasting almost one in four households will be privately renting by 2021.
Further data analysis for BBC News found that renting among all age groups is now more likely to be from a private landlord than from a council or housing association. Marked growth was noted in the 35 to 54-year-old age group, whose numbers have nearly doubled in the 10 years since 2006-07, according to the Family Resources Survey by the Department for Work and Pensions.
Rents are rising….
The latest HomeLet Rental Index showed rents in the UK rose in every one of the 12 regions it monitors - growth of 3.8% in February 2019 resulting in an average monthly rent of £940. In London, the uplift was slightly higher, with a rent rise of 4% in February 2019 and an average monthly rent of £1,599.
….and may continue to rise thanks to upheaval
While constant tenant demand coupled with poor property supply are behind rent rises to date, hikes in the latter part of 2019 and beyond are forecast thanks to industry changes.
Landlords and lettings agents are navigating legislative amendments and radical new rules that are having a detrimental effect on income. The constant stream of reforms is eroding profits and a byproduct is likely to be higher rents passed on to tenants in cases where landlords and agents can no longer absorb costs.
Some of the recent and impeding changes include:
- The introduction of the Homes (Fitness for Human Habitation) Act 2018, which comes in to effect from 20th March 2019
- The tenant fee ban, which comes in to effect on 1st June 2019
- The ban of the term ‘no DSS’ in lettings adverts, to end discrimination against tenants claiming housing benefits
- New guidelines from the National Trading Standards Estate Agency pertaining to the disclosure and possible ban of referral fees, which applies to letting agents as well as sales
- A question mark over the legality of Rent to Rent checks following a High Court ruling on the discrimination of non-UK nationals and British ethnic minorities
- HMO legislation changes
The turbulent nature of today’s lettings sector means agents’ business models are coming under greater scrutiny. Viewber is happy to discuss how to evolve your working practices to serve an industry undergoing transformation and make the kind of efficiencies we are driving for some clients available to you.