PRS REPORT: Demand for rental accommodation reached a record high in January, however, supply of rental stock fell to the lowest level we've recorded in seven months. This has unsurprisingly had an impact on rents with 42 per cent of agents witnessing rent increases.
Demand from tenants
Demand from prospective tenants in January increased to the highest level on record with 88 prospective tenants registered per branch compared to 56 the previous month.
This means that agents have witnessed a 57 per cent increase in the number of prospective tenants registered since December.
Year-on-year, demand for rental accommodation has increased by a fifth (21 per cent), rising from 73 in January 2019 to 88.
Supply of rental stock
However, the number of properties managed per branch fell from 206 in December to 191 in January.
Supply has not been this low since July last year when it stood at 184.
Year-on-year supply is down from 197 in January 2019, but up from 184 in January 2018.
Rent prices
The number of tenants experiencing rent increases rose in January, with 42 per cent of letting agents witnessing landlords increasing them, compared to 32 per cent in December last year.
Year-on-year, this figure is up from 26 per cent in January 2019, and 19 per cent in January 2018 [Figure 1].
This month’s results are a huge blow for tenants. With demand increasing by more than half, but rental supply falling, rent costs are unsurprisingly being pushed up. Our recent research found that tenants could miss out on nearly half a million properties as more landlords exit the traditional private rented sector and turn towards short-term lets which will only serve to worsen the problem for those seeking longer term rental accommodation.
With the Spring Budget around the corner, it’s important that the Government works to make the private rented sector attractive to landlords again, rather than introducing complex legislation which ultimately squeezes the sector and leaves tenants worse off.
While both sectors remain resilient, there is much that the next government can do to support buyers, renters such as improving the home buying/renting process and professionalisation of the sector via the regulation of agents. More broadly there is a need for a review of property taxes to make changes which stimulate supply and demand.
Although challenges remain, key economic indicators give cause for optimism. GDP is trending upward, and inflation is edging closer to the Bank of England’s target. Member sentiment varies by sector, but there is notable positivity in the Land and Yards and Industrial sectors. Supply and demand imbalances remain, most notably in the Pubs and Restaurants sector, which continues to be impacted by changing trends.
2024 has started well. In the Residential and Commercial property sectors, there seems to be a return of confidence, probably helped by the hold in interest rates. Catalogue numbers remain strong and registered bidder levels are also high. Our Fine Art and Chattels members report that 2024 has started buoyantly with plenty of bidders keen to get out of the blocks and acquire lots at all price levels and across all fields of collecting and furnishing.
It is clear from member sentiment, that economic uncertainty, and interest rates in particular, are continuing to weigh on the commercial property market. Supply and demand imbalances continue in key sectors, suggesting that there will be a challenging start to 2024.