Login

Lack Of Available Rental Property Driving PRS Price Increases


Thursday, August 27, 2015
Lack Of Available Rental Property Driving PRS Price Increases

Lack Of Available Rental Property Driving PRS Price Increases

Rental Property Demand Still Exceeding Supply

The latest private rental sector (PRS) property index published by Your Move and Reeds Rains shows that average rental property prices in the UK are beginning to exceed £800 (GBP) per month, pushing PRS rental prices to a new record high.

According to the report’s findings, PRS rents have reached a new record high in Yorkshire and the Humber, the East and West Midlands, as well as London, with rental property prices up 1.9% month on month and 6.8% year on year.

This may appear to be great for UK PRS landlord’s with rent protection insurance, however, the news isn’t all positive. Rent rises hitting new record peaks on both monthly and yearly time frames is a new phenomenon that the lettings industry should be concerned about because the reason behind the increase is the high demand for rental property and the apparent low supply of suitable properties available. Increasing rental prices puts a greater strain on tenant finances and tenants without rent protection insurance are already worried about future affordability.

A study by online property management agents, Geo Property Lettings, discovered that 57% of its tenants were worried about rent increases and future affordability.

The study also found that 75% of landlords operating without rent protection insurance reported an increase in rent arrears over the last 12 months and 10% of existing portfolio landlords have faced difficulties securing a mortgage.

Demand for rental property looks likely to remain strong for the foreseeable future due to the current housing shortage that is still affecting the UK and only a concerted effort to build more residential property will address this issue in the long term.

The strong tenant demand for rental property may be the driving force that is increasing PRS rental prices across the UK, but this does not mean that all landlords are enjoying additional yields from their rental property asset’s, increased operating costs, the restriction of mortgage finance and the introduction of new tax legislation are set to have a dramatic affect on the sector.

A new crackdown by mortgage lenders means that PRS landlords will need to put down bigger deposits on rental property purchases and they will face tighter checks for their buy to let mortgage loans, with landlords having to prove that they will not be wholly reliant on their rental income and that they will be able to afford to finance void periods and property repairs.

The future of the PRS could be dictated by the development of more specialist products and services for landlords and property investors that will allow them to protect their rental income and offer increased financial security. To discover the wide range of specialist products and services offered to the UK lettings industry please click here

Rent protection insurance

 


This was written by Mike Clarke. Posted on at 11:30 am. Filed under Insurance. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.