On average, five landlords per letting agency branch have decided to exit the buy-to-let sector.
The Association of Residential Letting Agents (ARLA) report for April has highlighted an average reduction of five landlords per branch. This has increased from four in March as the Tenants Fees Act, increased surcharges in stamp duty land tax and the abolition of Section 21 continue to cause a landlord exodus.
The Tenants Fees Act became legally enforceable on Saturday and landlord regulators and professional bodies have predicted a messy transition that will only hurt private tenants.
The April ARLA report found that 33% of agents have reported an rise in rents, increasing from 30% in March. Only 1.9% of tenants had renegotiated a reduced rent in April. Again, this had reduced from 2.9% in March.
As available housing stock per branch remains flat and begins to fall from 203 to 202 properties, the signs suggest that the market could become expensive for tenants jostling for property.
David Cox, ARLA Chief Executive, said:
“As predicted, April’s findings have shown an upsurge in the number of landlords selling their buy-to-let properties.
“Tomorrow, the Tenant Fees Act will come into force in England.
“This, coupled with the proposed scrapping of Section 21, is forcing landlords to either increase rents or leave the market altogether.
“As supply of rental accommodation falls further, tenants will only be faced with more competition for properties, pushing up rent prices on good-quality, well-managed properties and decreasing tenants’ ability to negotiate rent reductions.
“In order to remain profitable, landlords will increase rents to cover the additional fees they are now faced with and as a result, tenants will continue to feel the burn.”
“For renters, the ban on tenant fees, which takes effect this weekend, will sound positive. However, it won’t save them money in the long run.
“Tenants will continue to pay the same level as before, but this will be passed on to them through increased rents, rather than upfront costs.
“Research we conducted with Capital Economics revealed the fees ban will increase the average rent for tenants by approximately £103 per year.
“While those who stay in tenancies for less than two and a half years will see savings, those in long-term tenancies, which tend to be lower income families, will suffer.
“Based on an average rent increase of £103, those in tenancies for ten years or more will lose out by £755.”
Glynis Frew, CEO of Hunters, said:
“A recurring theme seems to have emerged over the last few years when it comes to government housing policy – good intentions bringing undesirable consequences.
“It’s frustrating because the industry and Government are actually joined up in their desire to ensure that tenants get a fair and honest deal.
“A small number of rogue agents or landlords have charged mind-boggling fees over the years. That’s a sad reality, but that’s not a fair reflection of the industry as a whole.
“Agents and landlords proposed and would have embraced fee caps, but the Government chose to reject those calls.
“It now needs to ask itself if this legislation is going to do the job it is intended to do.
“Will this really benefit tenants? Market forces will take their natural course and rent increases are likely to follow in many locations, especially where tenant demand is strongly outstripping supply.”
“In a period of four prime ministers, there have been 17 different housing ministers spanning 20 years.
“Maybe if we had a housing minster that stayed long enough to understand the housing industry and the market, we would all do so much better. Housing should not be a vote-winning political football.”
Will the recent legislative changes improve the market conditions for tenants? Has the conveyancing sector noticed a reduction in buy-to-let investors?
