Call for tougher regulation in UK residential lettings industry
‘This increased demand will put quality and standards under a greater spotlight. This year, it will be time for unscrupulous agents and landlord to put up or shut up. Consumers are rightly calling for much higher standards in the private rented sector,’ said ARLA managing director Ian Potter.
He said the organisation is seeing demand for licensed ARLA agents grow amongst tenants and landlords alike at a time when there is unlikely to be a slowdown in rent levels across the country over the next 12 months. ‘When it comes to rent levels, as long as the shortage of housing stock continues, it is unlikely that there will be any relief on rising rents throughout 2013. Indeed, in urban areas the demand for single person occupancies may well continue throughout 2013, which will increase the existing pressure on high demand properties and areas,’ he explained.
Research shows that advertised rental prices increased by an average of 1.9% across the UK in 2012, reaching a 12 month high of almost £1,000 a month. The research from Move with US reveals that average rental rates rose by £37 per month, reaching £976 per calendar month at the end of October.
Growth in advertised rental prices in London was slightly ahead of the UK average, rising by 3% in 2012. London rents also increased much faster than expected in April, as property owners tried to capitalise on the Olympics. Local rental markets were flooded with short term lets charging as much as £3,000 per week, though price levels fell back in line when the Olympics finished in August.
The region with the largest change in rental rates was the North East, with advertised prices increasing by more than 13% in October and November alone. Investors are likely to be attracted to the area by its lower house prices and the stable yields that the region is now delivering. Another region prospering was Yorkshire and Humber which experienced large increases in advertised rents, around 7%, when compared to others in the third quarter of 2012. However, it still remains one of the cheapest regions to rent in the UK with average advertised rents at just under £600 per month.
Quote from PropertyCommunity.com : “After an achingly slow year in 2009, corporate lettings have finally returned and with great momentum injecting a welcomed boost to the sluggish property market in Surrey, UK, it is claimed.”
Gross rental yields have remained at 5% throughout Britain in 2012, with the majority of regions returning an average yield of around 4%. Returns have remained stable as both house prices and rents have increased at similar levels. Overall, the firm says that this suggests that buy to let properties were a worthwhile investment in 2012.
‘Stable yields and rising rent values throughout the year have increased revenue in most regions. Investors are increasingly holding properties for longer periods with tenants staying for longer, house price gains, more debt repayment and improving absolute returns. These conditions look set to continue in the medium term making selective investment in rental property attractive,’ said Robin King, director of Move with Us.
‘Overall, advertised rental prices in 2013 are projected to continue to increase at a similar rate to 2012. However, they are likely to remain below the third quarter of 2012 levels until April of next year. Yields are expected to remain at 2012 levels, as rental prices will consistently react to changes in average property prices,’ he explained. ‘This, combined with rent increases in the majority of areas, could increase the revenue generated by rental properties. The current cyclical trend suggests that the average advertised rental price will remain below £1,000 next year and is likely to peak at around £990 in 2013,’ he added.