Rents start to fall as tenants feel the pinch

Monday 24th January 2011

New tenant applications rose 37% last year compared with 2009, Countrywide has reported. In contrast, the supply of properties available to let fell 29%.

Figures from Countrywide’s mortgage division also show that the biggest growth area of lending growth in 2010 was applications for buy-to-let mortgages: they rose 22%.
 
Grenville Turner, chief executive of Countrywide, said: “The continued challenges faced by home buyers to gain mortgage finance is likely to see more people turning to the private rental sector this year. Despite the increase in buy-to-let lending, supply remains significantly lower than demand, with an average of 4.5 tenants vying for every available property in 2010.

“During 2009 there were 2.3 tenants for every available rental property, which demonstrates the upward shift in demand we’re experiencing. This could soon reach critical levels as limited mortgage availability continues to stifle the market and the impact of the Government’s austerity measures on social housing and employment kicks in.”

Meanwhile, LSL – parent company of Your Move and Reeds Rains – reported that rents dropped in December by 1.2% to an average of £684 per month.

Despite the decrease, rents in December were 3.8% higher than the previous year. More worryingly, however, LSL said that 11.7% of rent in December went unpaid – a total of £276m – and a rise from the 9.7% that went unpaid in the previous month.

The British Property Federation said that much of the unpaid rent would have been owed by housing benefits tenants in receipt of Local Housing Allowance, and it repeated its calls to have the allowance paid direct to landlords.

Ian Fletcher, director of policy at the BPF, said: “Christmas is an expensive month for all. But Christmas should not be bankrolled by tenants not passing December’s rent on to landlords.

“The Government persists with a policy that was designed to empower LHA claimants, but the truth remains that millions of pounds of taxpayers’ money is being wasted and not finding its way to the landlord.

“There is already growing evidence that landlords are shunning LHA claimants.”