Letting agents across the UK have seen a further decline in new landlord instructions, as more buy-to-let investors leave the rental market, with some citing concerns about increased regulations, and reduced flexibility in managing their properties.
The latest report from RICS reveals a net balance of -26% moving deeper into negative territory from -19%. Looking ahead, the near-term rent expectations net balance of +25% suggests further rental price rises over the next three months owing in part to the widening supply-demand imbalance in the rental sector.
RICS chief economist, Simon Rubinsohn, described the negative feedback in the survey as “problematic”.
He added: “With demand continuing to grow, there appears little relief in store for tenants in terms of the upward pressure on rents. Critically, even with the rise in the build to rent to sector the shortall of affordable rental stock looks set to remain substantial.”
According to RICS, tenant demand increased in the three months to April, with a net balance of +14% of respondents (part of the quarterly seasonally adjusted rental market dataset). This represents a slightly stronger demand trend compared to the mostly flat picture seen in the previous quarter (net balance was +3% in the three months to January).
“The unintended consequences of the Renters Rights Bill are becoming more apparent as supply gets tighter,” said Tom Bill, head of UK residential research at Knight Frank. “A piece of legislation designed to protect tenants may ultimately push rents higher as some landlords decide to sell.”
“Together with tougher green regulations and higher mortgage costs, it means the choice for tenants is narrowing,” he added.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, commented: “Over the past month or so, we have noticed considerably more tenant interest but a resistance to paying higher rents. However, lack of supply, particularly of one and two bedroom flats in more popular areas, often prompted by landlords deciding not to renew, is preventing a more marked downturn in values.
“Looking forward, we do not expect much improvement in stock shortages, particularly as the Renters’ Rights Bill nears the statute book so the imbalance with demand is likely to continue.’
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