Rents have merely kept pace with RPI over past five years - Allsop

Rent rises in the private rental sector have merely tracked inflation and the Retail Price Index over the past five years - and not outstripped these measures, as some may have thought.

That’s the message from Allsop’s latest issue of the Rent Check, a barometer for the rental market in England and Wales published with BDRC.

The survey analysed annual rent rises during five years to March 2018 across different regions and property types. 

Annual rent increases were closely tied to the rate of inflation, and Allsop says this is because affordability levels have weakened tenants’ ability to pay and thus effectively limited rent rises during the last decade, when wages have been stagnating. 

Rent levels have also been tempered by a high number of landlords letting properties at below market rate to keep tenants, the agency says. 

Approximately 59 per cent of landlords surveyed by the firm declared they are letting at least one property at below local market levels.

But the most important factor in stabilising rent levels has been - until now at least - the relatively good supply, which has kept up with the growing demand for rental accommodation. 

However, the report says that a “policy cocktail of Prudential Regulation Authority changes, tapering tax relief and newly proposed three-year minimum tenancies could have a detrimental impact on future supply and result in a sharp increase in future rents.”

“Although most landlords are committed to the sector and are not likely to sell-up and leave anytime soon, government policy is likely to make life difficult for them in the longer-term. This risks the supply of much needed housing, which can’t be met by the Build To Rent sector and homeownership alone” explains Paul Winstanley, a partner at Allsop. 

The Rent Check report found that 85 per cent of landlords surveyed are currently making a profit, a figure that has not changed since early 2017. 

It has revealed that despite the uncertainty surrounding the impact of policy, a substantial number of landlords will remain in the sector and are unlikely to leave any time soon, with 41 per cent of landlords rating the outlook for their portfolio as good or very good for the next quarter.