September 06, 2010
Record tenant demand and rising rents have strengthened the lettings market while homeownership struggles to regain its footing post-recession.
Countrywide Residential Lettings reported an unprecedented 50,480 new tenants registering in the second quarter of this year – a 16% increase since January. In June alone, there were over 18,000 new tenant registrations.
“The number of tenants entering the market is at unprecedented levels – and we have yet to enter the peak season. Student demand for private rental accommodation will increase further” said Countrywide Residential Lettings John Hards.
However, while interest in lettings has boomed over recent months, a lack of properties, despite increasing rental prices, is undermining the sectors chances of progress.
An average of 5.5 tenants now vie for each property, says Countrywide. The highest demand remains for two-bedroom houses, with 8.9 tenants wanting each property.
“The buy-to-let sector remains a good source of investment: however, the Government needs to do more to incentivise new landlords in order to appease the current shortage of properties. If tenant levels continue to rise at the same rate, this will be further exacerbated,” added Mr Hards.
Subsequent comments from the Royal Institute of Chartered surveyors (RICS) have reiterated Countrywide’s concerns that more needs to be done to secure new housing.
According to the RICS, difficulties when securing mortgage finance, worries over a double dip in housing and large deposits required by lenders are leading to higher numbers seeking to rent rather than buy, which could exaggerate the lack of housing supply.
“The private rented sector has to expand to meet growing levels of tenant demand,” commented lender Paragon Mortgages.
“With fewer owner-occupier mortgages available, limited resources in the social housing sector and wider social and demographic changes such as a growing population, increasing net migration and rising numbers of single person households, we are entering the age of renting.
“Unless the private rented sector is able to meet this growth in demand, rental inflation is likely.”
