50,480 [1] new tenants registered for rental accommodation in the second quarter of the year – a 16 per cent increase since the start of the year [2], according to Countrywide, the UK’s largest letting agent and property services group.
June saw the sharpest increase with over 18,000 new tenants registering, the highest Countrywide’s rental market report – Quarter 2, 2010 shows that record demand saw number in a single month since records began [3], 22 per cent more the previous month. The rise in demand is a sharp contrast to the fall in the number of new properties being offered, which has fallen 6 percent in the last three months [4].
Countrywide’s lettings division surveyed its UK network of 211 branches to track key market trends, which help more than 50,000 landlords and tenants every year.
The survey findings also revealed that the government’s increase in capital gains tax does not appear to have deterred new first time landlords coming to the market, which has increased by six per cent since the last quarter. Fears that London landlords would be hit most by capital gains tax appear unfounded with a four per cent increase in new landlords letting their properties.
The excessive level of demand has led to marginal increases in rental prices. As more families turn to renting, four bedroom properties have seen the highest increase, with the average rent rising to £1,090 per calendar month – a four percent increase compared to Q1 2010.
There is now an average of 5.5 tenants vying for each property compared to 4.9 tenants in the first three months of the year. The highest demand remains for two bedroom houses in the South West with 8.9 tenants vying for each property. This level of demand is having a significant impact on the market, with properties being snapped up within on average of two weeks – three days less that in Q1 and 6 days less in Q4 2009.
John Hards, Countrywide Residential Lettings, Co-Managing Director said, “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 with university applications at record levels [5].
“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.”
Regional Overview
A severe lack of supply of two bedroom houses in the South West has continued to push up demand with 23.1 tenants vying for every two bed property entering the market.
The highest per cent of first time landlords coming to the market are in Scotland and the West Midlands.
In London, two bedroom flats made up majority of the properties on agents books but demand outstrips supply and is pushing up rental prices in some areas, including Kensington, Chelsea and Islington.
In the East Midlands, there was a 25 per cent increase in the demand from tenants for three bedroom properties.
In the North, there is a greater demand for family homes with over 50 per cent of tenants looking for three and four bedroom properties.
[1] Countrywide statistics back date to 2003
[2] Countrywide statistics – Q1 2010 vs Q2 2010
[3] Countrywide statistics back date to 2003
[4] Countrywide Statistics – Q1 vs Q2 2010
[5] www.ucas.ac.uk