Rental growth remains steady over the summer as the Hampstead market stays strong
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Almost one third of letting agents say tenants saw rents rise in July as both stock and demand grew
Rental growth stayed steady in July, maintaining the same level of growth as reported in the previous month this year. During both June and July, 31 per cent of letting agents have reported landlords increasing their rents, up four per cent since May, when 27 per cent reported increases. In July last year, 28 per cent reported increases.
The Private Rented Sector Report from the Association of Residential Letting Agents, ARLA Propertymark, today reported that demand had increased almost 10 per cent from a level of 61 in June to 70 in July.
At the same time, stock continues to remain level, with lettings branches managing on average 192 properties in July, up just two properties since June, but the highest level since January when the figure was 193.
The number of properties managed by agents has increased by four per cent year on year, with agents managing 184 last July.
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So does this picture of low stock and high demand translate to the north London market?
Asked if landlords are poised to raisetheir rents again, Marc von Grundherr, director at Benham & Reeves Residential Lettings, gave a resounding “No.”
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He said: “The Letting Market continues to be extremely competitive with so much new stock coming to the market that we are seeing tenants with more choice now than we have seen at any time in the last 5 years.
“With such choice landlords who push rents up see their properties sitting and taking a lot longer to let.”
However, Jerome Walker, head of lettings at TK International has seen marginal increases.
“We have generally seen stable rents with Landlords increasing rents marginally on premium stock,” he said.
“This has been fuelled by a stronger than expected summer period as Hampstead remains a desirable and exclusive location for applicants and corporate relocations. Our managed portfolio has also increased over the summer period.”
Benham and Reeves Residential Lettings have also taken on more properties, with 15 per cent more properties over the first two quarters of this year in comparison to last year.
“We are seeing lots of our clients completing on properties which they exchanged on 2-4 years ago and this looks set to continue for the next 6-12 months. These were unaffected by the Stamp Duty changes as they exchanged before the changes came into force,” said Mr von Grundherr.
And demand hasn’t slowed, says Mr von Grundherr, has welcomed 11 per cent more tenants between 1 June and 1 August than during the same period in 2016.
“This is good news for the market as it means we are seeing more lettings being concluded but landlords need to be warned that it is a challenging market with a lot of available supply and rents need to be accurately priced to take advantage of the busy market.”
However David Cox, CEO of ARLA Propertymark, was less sanguine about the circumstances of lettings agents.
“Landlords really are stuck between a rock and a hard place. All the tax increases they’ve incurred over the last 18 months have meant they either need to sell their properties and exit the market, or increase rent payments to plug the deficit,” he said.
ARLA has been vociferously opposed to recent, less landlord-friendly tax changes and the proposed tenant fees ban.
“Neither of these outcomes benefit tenants; if they exit the market, supply is even more strained and matched with growing demand, rent prices will increase anyway. Government may claim they are helping tenants but the unintended consequences of their actions on the private rental sector are now really being felt by tenants in terms of lack of homes to choose from and the feeling of being constantly priced out of the market. This needs to change.”