Tenants are getting savvier, by securing lower rents ahead of the lettings fee ban, according to a study of letting agents by ARLA Propertymark.
In the March Private Rented Sector report from the organisation, 3.6% of letting agents had seen rents drop, compared with 2.2% in February. There were still increases, however, with 25% of agents reporting that landlords had put their rents up, down from 32% last year.
Tenants Securing Lower Rents Ahead of Lettings Fee Ban
Worryingly, however, letting agents also reported an increasing number of landlords selling their rental properties during March. An average of four landlords per letting agent branch had announced plans to sell up last month.
No reason was given for the decision, but it does coincide with the reduction in mortgage interest tax relief and forthcoming letting agent fee ban.
The last time the number of landlords selling their properties rose above three per branch was in November last year, when the fee ban was announced.
David Cox, the Chief Executive of ARLA Propertymark, believes that this shows that tenants are already being affected by the Government’s buy-to-let tax changes.
It is believed that rent prices will go up following the lettings fee ban, as landlords will instead be forced to foot the charges.
Meanwhile, the supply of rental stock remained flat, at an average of 183, but was 8% higher than March 2016.
Letting agents also had a higher number of tenants registered, at 36 per branch, up from 34 in February.
Cox comments on the report: “It’s concerning that, despite supply increasing over last year, stock failed to return to the market after dipping in February.
“When we also consider that this is coupled with a rise in the number of landlords selling their properties, this is bad news for those searching for a rental property.
“The introduction of mortgage interest relief means the market is becoming less and less attractive to investors, and it appears some landlords are, as we predicted, choosing to exit the market rather than pay the higher taxes.”
He continues: “What’s more, two thirds of our members are concerned the Government will introduce even more landlord taxes in 2017, which will only further dampen supply.
“Following the announcement of the ban on letting agent fees, we expect the situation to only get worse for tenants when, inevitably, the costs are passed on to tenants through higher rents.
“However, it’s positive that more tenants are taking action and negotiating rent reductions before the consultation ends and they see their rents increase.”
Have your tenants been requesting lower rents recently?