The number of rental homes on the market with letting agents dropped between December and January, while the number of people registered with agents looking for property to rent increased.
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Month-on-month figures in January showed a decline in the number of rental properties per letting agent branch, from 200 in December down to 184, according to statistics from ARLA Propertymark. The figures had seen some improvement since their last monthly low of 182 per branch in October, but the situation seems to have once again reversed.
Meanwhile, an average of 70 prospective renters were on the books per letting agency branch in January, a rise of more than 15% from December’s average of 59. This widening gap between the number of tenants looking for a home and the number of landlords offering one has been partly blamed on the recent government actions that have made the buy-to-let market less attractive to many.
ARLA Propertymark’s chief executive David Cox believes renters could struggle in 2018, particularly considering that one in five tenants also saw their rents go up in January – although rental price rises were relatively flat over the course of last year, increasing at a slower rate than inflation, according to research from HomeLet.
“Housing stock is falling as rising taxes continue to force established landlords out of the market and deter entry into the sector – and the volume of renters is increasing as the cost of buying a home is moving further out of reach for many. Ultimately, until the prospect of investing in the buy-to-let market is more attractive for prospective landlords, and stock subsequently increases, tenants will continue to feel the burn.”
Section 24 of the Finance (no. 2) Act 2015 is one major change brought in by the government that is affecting, and will increasingly affect, landlords. The regulation means that landlords will no longer be able to deduct the full cost of mortgage interest payments on their buy-to-let properties before they pay tax, which will up the bill for most landlords and even push some into a higher rate of tax. Section 24 is being phased in gradually, starting in April 2017, with 2020 the final date when 100% of mortgage and finance costs will be limited to only 20% tax relief.