Rent increases in year to December 2019 validate concerns raised by Tiger Estates
According to HomeLet’s Rental Index, rent prices increased by 3.5 per cent in the year to December 2019 and could go up even more sharply in 2020, validating the concerns of lettings industry experts.
The index revealed that average rental price hike was higher than the rate of inflation, recorded at 1.5 per cent in November 2019.
The quickest rises in price were in Wales and the North West, where they increased 9.7 per cent and 8.3 per cent respectively, while in London rent prices were up by 2.1 per cent.
The South West and West Midlands saw rental prices go up at a rate below the average, with increases of 0.8 per cent and 1.6 per cent.
The average rent across the UK has now hit £953 per month, with the average rent in the capital recorded at £1,630.
HomeLet’s chief executive Martin Totty believes that the tightening of regulations on landlords through the Tenant Fees Act is responsible for the increases, and could set the tone for further hikes.
Totty said: “Looking forwards, more potential disincentives are on the horizon for landlords with the promise of a tightening legal regime around no-fault evictions”.
Totty believes that as landlords leave the market, rent will inevitably increase.
The Tenant Fees Act, introduced on June 1, 2019, banned the majority of letting fees for new tenants and introduced a five weeks’ rent cap on tenancy deposits. From June 1 this year, the ban is also set to extend to existing tenancies.
The new regulations were introduced with the hope of easing the financial burden on tenants and saving households money. However, the likelihood was always that landlords would simply increase rental prices to recoup losses, which is exactly what Blackpool based sales and lettings expert Tiger Estates predicted.
Speaking to The Parliamentary Review in 2019 around the time the Tenant Fees Act was set to enter force, Tiger Estates owner and manager Craig Webster said: “The private rental sector has been harshly targeted by government legislation, despite the necessity for private rental accommodation to meet housing demand.
“To combat the increase in costs, there will be a rise in rental prices, leading to an increase in rental payments from local councils or an increase in homelessness. The government, with their sustained attack on the private rental sector, could create a vicious cycle within the housing market.”
It was not simply the ban on tenant fees which put landlords under pressure to up rent and recoup costs, however, according to Webster.
Webster explained: “The decision to pay housing benefit to tenants directly, as opposed to landlords, was a poor decision that has ultimately increased rental arrears for landlords and resulted in the evictions of more tenants.
“The attack on the private rental sector is constant, with the increase in taxes and costs and the phasing out of mortgage relief over the next four years putting a strain on landlords. Many landlords will suffer financial difficulty because of an increase in repossessions.”
The statistics which prove that rent has increased have only served to validate these concerns.
However, Webster does believe that there are solutions alternative to a ban.
Webster said: “Many unregulated and unprofessional letting agents charge excessive tenant fees, but a ban is not the solution. Instead, it should become a legal necessity for estate, letting and management agents to be members of a professional organisation and redress scheme.
“Introducing letting agents to a professional organisation would ensure that those dealing with property assets are adequately qualified to look after client monies and landlord and tenant interests.”
Whether the government acts on such advice remains to be seen. Even if it opts to persist with the ban, there remain questions over its enforcement.
In December 2019, The Times revealed that over 200 complaints were filed concerning landlords that were still charging fees despite them becoming illegal, while the government distributed £4 million of investment across 100 local councils to be put toward tackling rogue landlords.
In short, there is plenty for the government to ponder regarding the issue, and heeding the calls of the industry would be an ideal start.