Demand for privately-rented flats and houses has fallen to a two-year low, while the supply of properties to rent has risen in fresh evidence of a slowdown in the property market.
The Association of Residential Letting Agents said there were just 26 prospective tenants registered per branch in December, down from 32 the month before and the lowest figure recorded since records began in January 2015.
Meanwhile renters have more properties to choose from. Arla said the number of properties on the books of the typical letting agency branch rose from 185 to 188 on the month.
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Rents have begun to flatten or fall in many parts of the UK, particularly London and the south, according to other survey data. Earlier this month property website Rightmove said asking rents in London fell 4.4% in 2016, with most of the fall happening in the wake of the UK’s vote to leave the EU.
In the south-east, rents rose 1.3% over the year, but fell 2.3% in the last quarter as the falls in London spread out to the commuter belt. The north-west of England recorded the worst rent rises, with tenants suffering an average 4.4% rise in the region during 2016, but fell in the last quarter of 2016.
Experts are divided on the outlook for rents in 2017. Many expect a slump in the buy-to-let market with lending criteria tightening ahead of the introduction of new taxes on the sector in April. But others say with few attractive alternatives, individuals will continue to invest in rental properties for their pension.
In the autumn statement the chancellor, Philip Hammond, stunned the property industry by announcing a ban on letting agency fees charged to tenants, to be brought in “as soon as possible”. But the consultation is ongoing, and letting agents are free to continue charging tenants until, or if, an outright ban is made formal.
Action group Generation Rent said tenants should have the upper hand in rent negotiations now that demand is weakening and supply increasing. Spokesman Dan Wilson Craw said: “If demand for rentals are decreasing, renters have another bargaining chip if they are faced with a rent increase: they can argue that their landlord will find it harder to replace them.
“And the forthcoming ban on fees will strengthen their hand further. Without fees to pay on a new home, renters will be able to move much more readily, which will give them more bargaining power should their landlord or agent try to raise the rent.”
But Arla managing director David Cox said: “Although December’s figures could indicate a bright future for renters, with the government’s impending ban on letting agent fees, it is actually rather bleak. We saw demand fall and supply rise slightly last month, these are in line with seasonal expectations and is what we expect to see in December. If the government goes ahead with an outright ban on fees, tenants will unfortunately be the ultimate victims, as costs are recouped for the vital services fees cover.”