The leader of one of Britain’s highest profile lettings agency operations has let rip at the government for what he calls “flawed policies” that have led to reduced supply.
Dorian Gonsalves, chief executive of Belvoir, says years of flawed government policies continue to impact the market, resulting in stock shortages and high tenant demand.
“When analysing the market, it is important to note the clear distinction between rental rises and rises in house prices. Rental increases are not due to Covid, or the race for space, and most definitely cannot be blamed on so-called ‘greedy landlords’” explains Gonsalves, in a report chronicling the latest rent rises.
“The reason for these increases is 100 per cent due to the barrage of flawed policies that the government has introduced in recent years, which have discouraged landlords from bringing new properties into the sector. These policies have included the introduction of higher stamp duty, the phasing out of mortgage tax relief, and the many stringent requirements placed on landlords to remain legally compliant.
“The resulting higher operating costs, coupled with increased maintenance prices, have left landlords with no option but to increase rents for new tenancies so that they can cover these higher costs.”
He says that Belvoir’s statistics reveal the highest rental increases since records began in 2008.
“Taking into account that most of our offices are outside the London area, at the end of last year those Belvoir offices that have been trading since 2008 in England, Scotland and Wales were reporting average advertised monthly rents of £817” says Gonsalves.
“This represents a large year on year increase of just under 9.5 per cent. At the end of last year, most of Belvoir’s franchisees were predicting that rents were likely to stay the same or would continue to rise in 2022.”
He continues: “Belvoir’s figures are comparable with data from other sources, with Zoopla recently reporting the strongest rental growth in 13 years. Rents do not typically rise or fall by more than four per cent, so these are staggering figures.
“A cross-section survey of franchisees across the Belvoir network reveals that half are experiencing a shortage in all types of properties, from one bed flats up to five-bedroom homes. There is some regional variation, but franchisees in most regions are predicting that there is little indication of any easing in the shortage of available properties.”
He predicts that rents will continue to increase at eight to 10 per cent for the rest of this year and will only fall back to previous lower levels of inflation if more landlords are encouraged to bring more properties to the market.