Rents reach record high as plummeting supply begins to hurt

Rightmove is reporting that average asking rents outside London have topped £800 per month for the first time, fuelled by a drop in the number of homes to let. 

The third quarter of 2018 saw an average out-of-London rent rise of 0.8 per cent, which is the biggest jump recorded at this time of year since 2015, and comes as the portal reports 8.7 per cent fewer rental properties available outside the capital now compared to this time last year.

The situation is, perhaps predictably, worse inside the M25.

In London, the number of available rental properties is down by 19.4 per cent with the portal reporting letting agents finding tenants four days quicker for landlords’ properties than a year ago.

Rightmove says one factor for this lack of rental stock is the drop in new buy to let mortgage approvals, down 14 per cent compared to a year ago and down by 53 per cent compared to three years ago, prior to the three per cent stamp duty surcharge on additional homes.

“What we’re left with is a lack of available homes for tenants looking to find their next place to rent, meaning that when the right kind of property does come along it isn’t sticking around for very long before it’s snapped up” says Rightmove’s commercial director and housing market analyst Miles Shipside.

It’s now four days quicker than this time last year for a rental property to be marked ‘let agreed’ in London, down from 41 days to 37 days. However, the majority of other regions are yet to see lower available stock translate through to a quicker time to let, with the national average of 35 days remaining the same as this time last year.

“Although some of the shortfall in supply will be met by quality housing provided by Build To Rent schemes in the coming years, it’s likely stock shortages will remain in areas with a high concentration of renters. Given this backdrop and rents likely to rise, private landlords should try and look beyond the current challenges if they can and stay in the sector” urges Shipside. 

“If they concentrate on improving the spec of their existing properties and buy better quality accommodation to add to their portfolios, tenant demand should steadily improve rental yields. Long term security is important too so see if landlords are open to negotiating a longer tenancy, perhaps with inflation only increases, as many will be keen to keep good tenants.”