Shortage in supply of rental stock

Recovery puts brakes on supply of rental homes

Friday 13th June 2014

Tenants are facing increasing competition as supply in the private rented sector contracts, according to the Association of Residential Letting Agents (ARLA).

The organisation’s latest quarterly research found that 59% of respondents reported more would-be tenants than properties available. This figure represents the second successive increase, from 46% in Q3 2013 to 54% in Q1 2014. Tenants are also less likely to haggle for properties, suggesting that the lack of supply is restricting the potential for negotiation. The number of respondents who have seen an increase in tenants haggling with landlords over rents in the past six months has fallen from 44% to 33%.

This rising competition for properties is compounded by the fact that over half (51%) of all landlords are not expecting to increase the size of their rental portfolios. At the same time almost one in five (17%) are expected to sell one or all of their properties in the next 12 months. This figure is the highest since Q1 2008, when the figure stood at 18%.

An additional factor in the shrinking pool of properties available is the declining numbers of ‘reluctant landlords’ – those who had to rent out their property because it could not be sold. Only 9% of ARLA members saw an increase in rental property coming on to the market for this reason. This is a 4% decrease on the figure recorded in the first quarter of 2014, and it contrasts with the figure of 93% recorded when this question was first asked six years ago.

Ian Potter, managing director of ARLA, said: “Supply in the rental sector is suffering from the buoyant housing market, and there is a concern that some tenants may now face increased competition for the properties they want. While the departure of reluctant landlords is positive for those who are now able to sell, there is a risk of a supply gap opening up in the private rental sector. Investing in new schemes such as build-to-rent could be one way to alleviate a lack of available rental properties if this trend continues.

“I would urge tenants and landlords alike to seek the expert advice of an ARLA agent as professional insight and experience is especially important in a competitive market.”

http://www.landlordtoday.co.uk/news_features/Recovery-puts-brakes-on-supply-of-rental-homes