One of the leading agents is warning that tenants are now hitting an affordability ceiling and cannot afford indefinitely-rising rents.
Jeremy Leaf, who runs a London agency and is the former chair of the residential faculty of the Royal Institution of Chartered Surveyors, was responding to the latest government rental market data when he said: “Rents are still rising strongly which shows demand continues to outpace supply but as we have also found in our offices there is an affordability ceiling which tenants are finding increasingly difficult to break.
“Unfortunately, too many good landlords are leaving the sector in response to concerns about increasing tax and regulatory issues. Prospects of an improvement in choice and substantial softening in rents therefore seems unlikely for the time being at least.”
His comments follow the release of data from the Office of National Statistics which shows private rents up 8.4% in the year to September, to an average of £1,336 across Great Britain.
In England, rent inflation was highest in London at 9.8% and lowest in the South West and Yorkshire and The Humber at 6.3%.
Sarah Coles, head of personal finance at business consultancy Hargreaves Lansdown, describes the latest rental high as “punishing.”
She continues: “Given the continued exodus of landlords, renters face the double misery of fighting over the scraps and then paying a fortune for them.
There’s nothing new in the trend for landlords to leave the market, but the Budget has created a new impetus.
“Zoopla figures earlier this month showed that 13% of properties for sale were previously rented out, and with a dearth of landlords prepared to buy right now, there’s every chance they’ll be lost to the rental market. Fears of changes to capital gains tax in the Budget are driving plenty of sales. There’s a concern that the rate could rise, or the rule which means it resets on death could change.
“Property is already one of the least tax-efficient ways to invest, and either change could make it even more punishing for those with investment properties. Life isn’t set to get any easier for landlords, so the steady stream of those leaving the market is likely to continue, and rents may well keep rising.’
This article is taken from Landlord Today