Private rented sector news by: Madalena Penny.
It appears to be a bit of a mixed bag for both tenants and landlords this year, according to industry studies. While the amount of privately rented homes are due to increase, new legislation affecting letting agents may see rental prices rise considerably, to absorb the loss of revenue due to the new Tenant Fee Ban to be incorporated later this year.
“Unfortunately, it looks like rising rent costs are going to continue into the New Year, as agents need to be moving into an 0% fee business model by October, which will push up rents as the costs are passed through landlords and onto tenants,” he said.
“In terms of supply of rental properties, which agents largely expect to fall, we need to remember that the minimum energy efficiency standards coming into the new year, could see up to 300,000 properties being taken off the market because they don’t reach the minimum requirements. This will also in turn – push rent costs up.”
Although private rented households are predicted to increase by 24% over the next 4-years, not everyone is happy about it. Last year’s survey by The House Shop, revealed only 54% of private renters where happy with their renting situation, compared to 83% of homeowners who were happy with their situation.
Private Rented Sector & the New Kid on the Block
Further research by Knights Frank, revealed that the emerging ‘Build-to-Rent’ has seen one of the largest increases in the private rented sector- now estimated to be worth a cool £25 Billion. This proportional piece of the industry has increased year-on-year, due to shortage of rented housing stock, restrictions on homeowner mortgages and lack of social housing, while house prices continue to rise. The Build-to-Rent sector is founded on purposely built blocks of accommodation, managed by the private rented sector in an attempt to close the gap in ever decreasing available housing stock.
The report also suggested that couples without children, made up the largest portion of renters, followed closely behind by singles living alone. These two demographics account for 59% of the private rented sector, while households comprising of families with children accounted for only 25% .
According to Diana Babacic of the PRS Research Consultancy, there is no indication that the private rented sector is slowing down.
“We expect the demand for privately rented properties will continue to grow. official household projections show 1.14 million new households being created between 2016-2021”, she said.
So, for now, we can only wait and see how new legislation, increasing rental prices and economic forces will affect landlords, letting agents and tenants this year.