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Tue 19 Sep 2017
August saw the largest increase in rents this year, nationally, according to figures release today by industry referencing experts Homelet.
Data shows that the average rental amount paid on new tenancies last month was £939, which is up 2.4% on August 2016, when the figure was £916.
London saw the highest increase, however if you take it out of the equation, 10 of the 11 remaining regions still saw rents rise significantly.
To put this into a more local context, we have a large managed portfolio of around 900 properties in the West Cambs / North Beds area. Historically the average rental amount we receive has in recent years, sat around the £700-710pcm mark. However if we look at the average rent paid on new tenancy agreements in 2017, this average sits at £747 - quite a jump.
Whilst this is good news for landlords and investors, I fear it doesn't bode too well for tenants. Our wider concern is when these gradual organic rental increases combine with the introduction of the tenant fee ban - likely to come into play in 2018 http://www.bbc.co.uk/news/business-40354019
As tenants will no longer be required to pay letting fees, these costs in many cases may be passed onto the landlord. Having spoken to many of our landlord clients recently, the general feeling will be that they too will be unable to swallow these additional costs, so will recoup them by raising rents.
When this occurs, the vicious circle will be complete, and many tenants may find themselves paying more over the lifetime of their tenancy (through increased rent), than they would prior to the tenant letting fee ban.
In the meantime, while the government goes through the snail-paced process of approving the proposed legislation, many landlords will welcome the news of rental values increasing:
“Whilst we’ve often observed a seasonal uplift in average rents at this time of year, there’s evidence of a trend now emerging which points to a reversal of the declines seen over the early part of this year. This will be welcome relief to landlords who have been battered by the perfect storm of tax changes and post-Brexit uncertainties” says HomeLet’s chief executive officer, Martin Totty.
“Many landlords still face further increases in their costs and so will need to find a new equilibrium between their legitimate required returns and affordability for tenants. It seems the elements in solving that particular equation become ever more complex”
Tim Lovett
Managing Director
"I've used Lovett for 12 years to let several different properties and have always found them to be exceptionally good at the letting business. Excellent customer service from Anthony and team."
