The lettings director at Urban, the online agency recently snapped up by Emoov, says the rental market is faced with significant problems “as it buckles under the strain of growing demand and dwindling stock.”
Adam Male - whose firm was part of a £100m merger involving Emoov and Tepilo in the spring of this year - says this week’s Royal Institution of Chartered Surveyors market report suggested rents were rising around three per cent.
But he says this prompts affordability worries which, combined with new laws, may ultimately damage the lettings sector.
“Soaring rents may be welcomed by landlords with the resolve to jump through the latest lot of legislative hoops rather than throwing in the towel, but a three per cent hike will be hard to stomach for those already struggling with current rental affordability” says Male.
He says the rise is “yet more proof that the government’s persistent stranglehold on the buy to let sector is doing more harm than good. A further decline in rental stocks is a direct consequence of landlords exiting the sector, a sector that was already in desperate need of more rental stock to meet demand, not less.”
RICS says its figures indicate “a further decline in rental stock over the [past] month”, a trend that has been emerging on the back of tax changes for landlords.
Contributors to this week’s RICS snapshot reported a drop in new lettings instructions for the 23rd straight month, while tenant demand continues to rise.
“As a result of the supply-demand imbalance, near term rent expectations point to further rental growth in the coming three months. Significantly feedback from London is also pointing to the imbalance between tenant demand and supply beginning to widen which has pushed up rental projections for the coming year” says RICS.
“Further out, rents are expected to rise at a faster rate than house prices in the medium term; average rental growth projections stand at around three per cent per annum for the next five years whilst prices are projected to rise by around two per cent on the same basis.”