RICS has released its monthly survey of letting agents, to gauge the state of the Private Rented Sector (PRS).
RICS Findings
- Rents Are Rising: Lettings agents are saying that the cost of renting homes will continue to rise quite fast.
- Rising Demand: More people are looking for homes to rent. In the last three months leading up to July, there was a significant rise in the number of people wanting to rent homes.
- Less Supply: At the same time, fewer homes are available for rent. The number of landlords looking to rent out their properties is falling.
How Do We Know This?
- Surveys & Data: A survey from the Royal Institution of Chartered Surveyors (RICS) showed that over half (54%) of the agents they asked said that rents went up in the last three months. This rise in demand for rental properties is the highest since the start of the previous year.
- Rent Records: Separate research has shown that the average cost of renting a home in England has hit a new high at £1,367 every month.
Experts’ Take on the Situation
- A Concerning Outlook: Simon Rubinsohn from RICS thinks the current situation is worrying because the demand is staying strong, but the number of available homes is not going up. This is probably why rents are going up, even when other living costs are also rising.
- Fewer Landlords in the Game: Some lettings agents believe that the rental market is facing challenges. Will Ravenhill points out that many landlords are pulling out, and those who remain are raising rents. Kevin Burt-Gray notes that because of fewer properties available and many potential tenants, rental homes are getting multiple applications soon after being listed. David Martindale also confirms that rents are rising due to the high demand.
Interesting Numbers to Note
- Landlord Withdrawal: 30% of agents have seen fewer landlords wanting to rent out their homes, which is a decline from 24% in the previous month.
- Rental Forecast: A whopping 63% of the agents think rents will go up in the next three months. This expectation is higher than the previous quarter and is at its highest level ever.
Why is the Demand So High?
- Students Boosting Demand: Recent data showed a big 19% rise in rents over a month, driven largely by students looking for places to live for their university term.
How Competitive is the Market?
Harriet Scanlan provides a real-world example: Her estate agency listed three properties for rent, and within just two days, each property had multiple offers. Some landlords even received offers higher than their asking price due to the fierce competition among potential tenants.
In simple words, more people want to rent homes, there are fewer homes available, and this imbalance is making the rents go up.