UK rental supply continues to fall

UK rental supply continues to fall

As the number of rental properties available in the UK continues to fall, rental costs are expected to increase as demand outpaces supply.

Summary:

  • The number of rental properties on the market in the UK continues to fall, as rental costs are set to rise
  • Supply has fallen by 5% from April 2015 and is expected to continue to decrease
  • With an expected 7.2 million households to be part of the private rented sector by 2025, will demand be able to keep up with supply?

Supply of residential rental properties in the UK continues to fall, while rental costs are expected to rise.

Overall the number of rental properties managed per lettings agents branch increased by 8% in April to the highest level this year, but has fallen from the levels seen in April 2015, according to the data from the Association of Residential Lettings Agents (ARLA).

“We expect that fewer investors will be taking on buy-to-let properties over the next six months, following the price hikes, meaning that once these properties are filled we’ll see supply nose dive once again,” David Cox, ARLA Managing Director, stated.

Supply still stands 5% lower than in April last year and continues to fall year on year. In April 2015, the average number of properties managed per branch was 193; this year it stands at 183.

Rent costs are expected to rise following the buy-to-let stamp duty rise. Some 66% of ARLA agents predicted that the stamp duty reforms will push rent costs up for tenants down the line.

By 2025 it’s expected that one in four households will be privately renting, totaling 7.2 million and overtaking the number of owner-occupier households for the first time. The trend will be most evident in 20 to 39-year-olds, with over half of the demographic renting.

Build-to-rent, a sector that looks set to overtake traditional buy-to-let, provides purpose-built rental accommodation to the growing number who prefer to rent than buy. Designed for the modern tenant, Knight Frank estimates that the sector will be worth £50 billion by 2020.

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