One of Britain’s leading agents – former RICS residential chairman Jeremy Leaf – says he is seeing a change of mood in the private rental market.
Responding to the latest government figures about the lettings market, Leaf says: “Unsurprisingly, rents have risen again albeit at a slower pace than previously, principally due to the continuing shortage of stock. However, we have noticed in our offices a reluctance to keep chasing up rents and an affordability ceiling finally having an impact on many tenants.
“The result is a bit of a stalemate with tenants trying to renew at or close to previous levels and trying to find compromises with landlords struggling in many cases with higher loan repayments.”
The rental data, produced by the Office for National Statistics, shows rents having risen 6.2 per cent in the year to November.
Some analysts, most notably those at Zoopla, have suggested that rent rises will be seen again next year but are now nearing an ‘affordability ceiling’ – Leaf’s comments suggests that point may be nearer than some anticipate.
Harriet Scanlan, lettings manager at London agency Antony Roberts, says: “The lettings market continues to stand strong, showcasing its resilience even in the face of economic fluctuations. However, tenants are now experiencing a welcome shift as there has been a slight increase in housing stock, providing them with a broader range of choices when it comes to sourcing their new home and leading to a decrease in multiple offers on one property.
“Landlords continue to enjoy the benefits of a buoyant letting market with little-to-no void periods. They are also seeing rental increases upon renewal or reletting, although on the ground the pace of these increments appears to be slightly tempered.”
The ONS has also published the November sales market data – a price drop of just 1.2 per cent over the 12 month period.
Property market commentator and PropTech entrepreneur Anthony Codling says: “The fact that average UK house prices in October 2023 have only fallen by £3,000 in one year is testament to just how robust the UK housing market is. In the aftermath of last year’s mini budget few, if any, commentators were suggesting a fall of just £3,000 in the coming year.
“The housing market is still challenging, but with inflation falling, the prospect of Bank Rate (and therefore mortgage rate cuts) edges ever closer. During 2023 the temperature of the UK housing market has been frosty, but the early indications are that in 2024 the housing market may start to warm up.”
Emma Cox, managing director of real estate at prominent buy to let lender Shawbrook Bank, says: “The shortage of available homes on the market is contributing to the relative resilience of house prices. For professional investors, the rental market is still active with demand outstripping supply and rents continuing to rise. While there’s certainly some diversification into commercial property and other asset classes from portfolio landlords, the buy-to-let market is here to stay, and we expect strong demand for the finance to support these opportunities in 2024.”
