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The rising cost of living is affecting just about everyone these days, but arguably tenants can find it even more difficult, particularly with typical rents eating up more income than mortgage repayments – which, in turn, makes it harder to save up for said mortgage. Unfortunately, things may not be getting easier anytime soon, with research from ARLA Propertymark (Association of Residential Letting Agents) showing that rents are still rising.
The figures show that 31% of letting agents saw landlords increase rents for tenants in June, up from 27% in May, and the highest level seen since April 2016 (when another 31% of agents reported rent hikes).
This is despite the fact that the gap between supply and demand has eased slightly, with the number of properties managed per letting agency branch rising to 190 in June – up from 189 in May and a rise of 8% year-on-year – while the number of new tenants registered per branch fell to 61, down from an average of 65 in both April and May.
So why are rents still rising so much? Well, lots of it could be due to recent Government initiatives – such as the changes to buy-to-let tax relief and higher stamp duty – which have piled the pressure on landlords, and meant they've needed to find ways to cover their costs.
However, much of it could still simply be an issue of supply and demand, as although things have improved slightly this month, there's still a long way to go.
David Cox, ARLA Propertymark chief executive, commented: "With the cost of living on the rise and inflationary pressures tightening, the last thing tenants need is for their rents to continue rising. However, the fact that supply looks to be rising while demand has dropped slightly indicates a move in the right direction for the market.
"Ultimately, to stop rent prices from increasing too much, we need to find the balance between supply and demand. While there's still a long way to go, if the supply of rental stock continues to increase, and the number of tenants searching for new properties drops off, we'll be making headway towards achieving this."
As David said, things are definitely moving in the right direction, but it doesn't necessarily mean that things will drastically improve for tenants anytime soon. After all, plenty of additional regulation is set to hit the market in the coming months – not to mention rising inflation, higher buy-to-let mortgage rates and higher living costs in general – which could have a knock-on effect on rents.
One particular piece of legislation that could impact tenants is the upcoming ban on letting agent fees. While it initially sounds like great news, look a little deeper and it may not actually be so worthwhile – after all, forcing landlords to pay any fees simply means they'll pass on those costs in the form of higher rents, so tenants will still end up paying for it; it'll just be spread out rather than in one lump sum.
As a result, 83% of letting agents surveyed would like the Government to scrap the impending ban, but whether that comes to pass is a different story. For now, all landlords can do is look for ways to keep their buy-to-let portfolio profitable – ideally without adding too many costs to tenants – while tenants will want to keep their budget in check as much as possible.
If you're a landlord looking for ways to cut costs, finding the best buy-to-let mortgage deal could be a great place to start. Or, if you're a tenant trying to cope with rising rents, start by focusing on ways to keep your outgoings to a minimum, and check out how to save up a deposit to get on the ladder instead.
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