Rents are likely to rise in the third quarter of year as fewer rental homes come on to the market because more landlords are beginning to sell their properties as a consequence of recent tax changes affecting the PRS, with families and professionals expected to be hardest hit by rent hikes, according to Belvoir. But the property franchise insists that rents across the country are not ‘spiralling out of control’.
The company, which has over 300 offices, has published its Q2 rental index, revealing that private rents have increased by an average of 2.75% over the past year, from £730 per calendar month in Q2 2016 to £751pcm in Q2 2017.
Comparing the Q2 2017 average to the 2016 annual average of £783pcm, this indicates rental price growth of marginally below 2%, which is more or less in line with ONS statistics and other rental indexes.
Belvoir’s CEO, Dorian Gonsalves, commented: “Sensationalist media reports that rents are spiralling out of control across the country are at odds with what our offices are reporting, and that other letting agents across the country are currently experiencing. However, feedback from our franchisees confirmed that fewer properties were seeing static rents than in the previous quarter, and more offices experienced rent rises of £25 and £50 per month.
“Belvoir's rental index began in 2009 and is an extremely valuable resource, which analyses the ups and downs of the rental market not just at national level, but regionally and at county level.
“We are also tracking tenant demand, length of tenancies, arrears and evictions with predictions for rental demand in the next quarter.”
The latest data shows rents range from £597pcm in the North West, £665pcm in Yorkshire, through to £1,048pcm in the South East and £1,446pcm in London.
In the capital, the average rent recorded in Q2 2017 was £1,454pcm, excluding Central London, which is an increase of 4.5% compared to Q2 2016.
However, Q2 2017 versus the 2016 annual average of £1,511pcm shows a fall in rents of around 4%. For London, during Q2 2017, half of Belvor’s offices recorded a slight fall in rents and half recorded slight increases.
Around 40% of offices in the South East experienced a slight rise in rents during Q2 2017, whilst 40% recorded slight falls and 20% experienced static rents.
Three quarters of offices in the South West experienced a decline in rents during Q2 2017, with the remaining quarter recording slight increases.
This pattern continued in East Anglia, Yorkshire and the East Midlands where half of offices recorded small rental increases and the remaining offices experienced slight falls.
In the North West, just over two thirds of offices experienced slight increases during Q2 2017, and just under a third experienced slight falls with stable rents in remaining offices.
Reflecting on Belvoir’s rental trend predictions for different rental sectors in Q3, Gonsalves said: “Families and professionals are most likely to experience rent rises. Demand from tenants on benefits saw the biggest increase versus Q1 and therefore rents are expected to rise for this sector. Two to three bed properties remain in demand and are in short supply.
“Although we are not currently seeing a huge exit of landlords from the market it is apparent that landlords are beginning to sell their properties. Most agents expect investor enquiries to remain the same, or to fall, especially for room rents.”
Average void periods for one week remain the same, although there has been an increase in two-week voids, according to Gonsalves.
He continued: “The majority of tenants are staying in their properties for longer, with almost half choosing to stay for 13-18 months, and over 36% staying for up to two years.
“Importantly, over 80% of Belvoir offices carried out no or just one evictions during Q2 2017, This is a good indication of how well our referencing and property management systems are performing and highlights the importance of tenants choosing a reputable agent when renting their home.
“Almost 70% of Belvoir agents believe the government has under-estimated how many landlords will be affected by the changes to mortgage interest relief, and we look forward to the results of our Q3 rental index with interest.”