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Data released by ARLA has revealed some interesting new trends related to landlords and the buy to let sector, which are unsurprising given the widespread changes the sector has undergone in the last 18-months.
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Rent Hikes
According to the figures from ARLA, the number of landlords raising their property rents is at its highest in two years. 35 percent of landlords put up the rent in August, compared to 27 percent of landlords in August 2016. This figure is only slightly lower than 2015, which saw 37 percent of landlords raise rents. Only two percent of tenants were able to persuade their landlord to give them a rent discount.
The hike in rents strongly suggests that many landlords are trying to minimise the damage caused by government tax reforms, including the loss of mortgage interest tax relief. The tax changes are making it harder for UK landlords to run a profitable buy to let portfolio, so rather than absorbing the extra costs, as they might have done in the past, landlords have no choice but to increase rents.
Supply Outstrips Demand
However, in some parts of the country, rental home supply is slightly exceeding demand, so landlords there are unable to put the rent up to cover their extra costs. If they do, tenants simply find a similar property at a cheaper price.
Nevertheless, it is clear that the government’s tax reforms are having an effect on the rental market and in many cases, it is the tenants who are suffering just as much as their landlords.
