In their latest report on the private rented sector, the findings from ARLA Propertymark have revealed that two thirds of letting agencies witnessed landlords increasing the rents for their existing tenants. This is a 31 per cent increase from the same period in the previous year and the highest on record.
In addition to this, there was also a drop in rental stock available on the market - letting agents registered with ARLA had an average of 184 landlords on their books, this was a drop from an average of 199 in the previous month.
As a result of the hike in rents and landlords exiting the market, the private rented sector also saw an increase in tenant demand. In the report, ARLA found that letting agents had an average of 73 new tenants registering with them to look for a new home, which was an increase from 70 in the previous month. The regions that saw highest demand were London, the North West and the East of England. It’s clear that these findings are a result of the Tenant Fee Ban that was introduced at the start of June - many landlords were concerned that this would affect their investment, but it turns out that tenants are paying for these fees in their rent throughout their tenancy instead of paying them up front at the start of the tenancy.
This is the latest in the long line of good news for buy-to-let investors. It was also recently revealed that activity in the PRS had picked up over the summer months and the private rented sector in the UK is now home to over 5.2 million people - a figure that is only going to grow further in the coming months. It has also been revealed that the number of mortgages being taken out in July was at the highest level since the financial crash in 2009.
In response to the report, the chief executive of ARLA Propertymark, David Cox, said: “Following the Tenant Fees Act coming into force in June, rents have continued to rise, which we believed would happen.
The fees agents have been banned from charging are still being paid for by tenants, however, it’s now through their rent, rather than upfront costs.
The fall in the number of properties available further increases competition in the market, which only pushes rents up or forces landlords to exit the market entirely.
As the sector faces increased levels of legislation, it’s evident this is putting even more pressure on the industry.”
Investors should take advantage of the current situation of the PRS, it’s clear that the Tenant Fee Ban is not having a detrimental effect on buy to let landlords as initially feared. There is a huge shortage of rental stock in the UK, so now is excellent time for buy to let investors to make their next investment.
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