Rents in Britain have stayed broadly flat over the last year but overall the lettings market is highly active with viewings up 13.3% year on year and lease signings up 3.5%, new research shows.
However, at the same time, supply has fallen by 6.9%, according to the quarterly analysis from estate agents software platform Reapit and residential property market intelligence consultancy Dataloft.
It combines data from a representative sample of lettings agency branches across the UK. The report uses previously unreleased data on property viewings, as well as other demand signals coming from the rental market.
It predicts that there will be a further tightening of supply in the near term and says that this could drive a rise in rental prices over the coming year.
It also points out that the withdrawal of landlord mortgage tax relief is encouraging landlords to sell and adding to supply issues. The tax relief cut, which was announced in 2015, only took effect this year.
‘There are strong market indications that upwards of 10% of landlords are actively considering selling their properties. Multiple vendors have reported similar information, and we are actively tracking this phenomenon,’ said Gary Barker, chief executive officer of Reapit.
‘Our research has uncovered an imminent supply-side squeeze in the rental market. As rental inventory dries up, it’s inevitable that rental prices will increase. Landlords deciding to sell their properties will further squeeze the supply side of the rental market. There are simply not enough properties to meet demand,’ he explained.
The research looked at other factors driving rental value and says that the growth in high rise apartment construction is delivering rent premiums inside and outside London. Properties above the first floor command a 19% rent premium in the capital and a 6% premium elsewhere. This compares with a modest 4% premium for a first-floor dwelling.