Landlords 'in the driving seat' in demand-led rental market

by Sarah Ashcroft

Landlords letting property are very much in the driving seat when it comes to property market growth, according to a leading industry expert.

Low sales volumes have meant that rental agreements are "where the growth and the action is", claims the director at estate agent Douglas and Gordon, Ed Mead.

Figures from the Association of Residential Letting Agents (Arla) reveal that demand is outstripping supply in the lettings sector.

In fact, the number of tenancy agreements signed across agents has risen rapidly over the last decade, with an average of 34 new tenants each month per Arla member branch.

Tenants are also spending more time in their rental properties, with the average period of tenancy reaching a record high of 19 months.

Many landlords will see this as an opportunity to increase their rents, although have been warned to take care, as in some cases this may be counterproductive.

Mr Mead said it's important to think carefully about how much rents are increased by, in case an existing tenant attempts to find a cheaper option elsewhere.

"A one-month void over a year equals an eight per cent reduction in your rent," he explained. "So you are much better off keeping your tenant there and agreeing a reasonable increase rather than being greedy and going for an exceptional increase which you may or may not get, but could be looking at a month or two's void."

Arla president Tim Hyatt has called for more action to be taken to help landlords support the growing influx of tenants seeking to rent, noting the sector "cannot support the housing market in perpetuity".

"The government is doing little to encourage landlords to invest in new properties therefore we are running out of quality stock to offer to tenants," he added. "This is reflected in rent increases and a lack of choice for consumers."

Arla figures suggest that demand for rental properties is particularly acute in London and the south-east of England.

Published on: October 24, 2011

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