Gap in supply of rental properties could be bridged by investors

Gap in supply of rental properties could be bridged by investors

The number of privately rented properties registered at letting agents decreased again in February by a further 5% compared to January, but as Generation Rent continues to rise, the void means the market is open for new investment.

On average, according to the latest figures from ARLA Propertymark, letting agents across the UK now have 175 properties on their books compared to January’s 184 per branch, which is the lowest amount seen since May 2016, when the average was 171. By comparison, this time last year agents had an average of 183 rental properties per branch available, although the current level is very similar to February 2016’s 176 per branch – indicating the results could be a natural annual fluctuation.

However, there are also less tenants looking for homes through agents, with the average branch registering 61 interested renters in February, which is a 13% fall compared to January’s 70 per branch. With a number of recent statistics pointing towards a decrease in homeownership and a rise in renting across the UK, the figures could perhaps indicate that more landlords and tenants are operating outside of letting agents.

Investors and landlords can plug the gap

David Cox, ARLA Propertymark’s chief executive, however, believes that the dip in available rental properties could be linked to the recent changes in EPC rules for landlords, which came into effect on all rental properties from 1st April.

He said: “This month’s results continue to show a drop in the supply of rental properties and this is no surprise; the minimum energy efficiency standards come into effect in April meaning all rental properties must be EPC rated E or above. The dip in supply indicates that landlords are cutting it fine and taking their properties off the market to make the necessary changes before the deadline – but we could also see up to 300,000 properties taken off the after the deadline passes on Sunday because they don’t reach the minimum requirements.”

Cox believes the result of this dearth in supply could be that rents are pushed up, as there could be more tenants than properties.

Property investors and developers who are willing to look into options such as build-to-rent developments, which are aimed purely at renting tenants and are going a long way towards increasing the supply of high-quality rental homes, will be able to maximise this potential. Furthermore, those buy-to-let landlords who keep up with the changing regulations are likely to benefit from the rising numbers of people joining Generation Rent over the coming years.

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