Belvoir CEO Dorian Gonsalves warns of ongoing challenges due to years of flawed government policies. These policies have resulted in stock shortages and high tenant demand, creating a complex rental landscape.
Dorian highlights a significant trend outside London, where Belvoir offices have seen average monthly rents of £817 at the end of last year. This marks an almost 9.5% increase year-on-year. Most franchisees predict that rents will either remain stable or continue rising in 2022. Supporting this, Zoopla reported the strongest rental growth in 13 years. Typically, rents do not fluctuate by more than +/-4%, making these figures quite remarkable.
A survey of Belvoir franchisees reveals that half are experiencing shortages in all types of properties, from one-bedroom flats to five-bedroom homes. Although there is some regional variation, most regions show little sign of easing in property availability.
When analyzing the market, it is crucial to distinguish between rental and house price increases. Rental hikes are not due to Covid-19 or a rush for space, nor can they be blamed on ‘greedy landlords.’ Instead, these increases stem from flawed government policies that have discouraged landlords from adding new properties to the sector. These policies include higher stamp duty, the phasing out of mortgage tax relief, and stringent compliance requirements for landlords. Consequently, landlords face higher operating costs and increased maintenance prices, leaving them with no choice but to raise rents for new tenancies.
The estate agency sector witnessed unprecedented activity in 2021, with transactions reaching around 1.5 million. This is expected to return to pre-Covid levels of about 1.2 million transactions in 2022, although prices remain strong. According to the latest twentyci report, sales across the UK in 2021 were, on average, 13% higher than in 2020, with double-digit growth in most regions.
Stock levels are now lower, influenced by the stamp duty holiday, the post-lockdown race for space, and access to cheap mortgage rates, enabling higher borrowing and home prices. This trend does not extend to the private rented sector (PRS).
New landlords are discouraged from purchasing properties, leading to less available accommodation for tenants. Dorian predicts rental inflation will continue at 8-10% for the rest of the year. This will only decrease if more landlords are encouraged to bring additional properties to the market. Estate agency transactions are likely to revert to pre-Covid levels in 2022, with further house price growth driven by strong buyer demand and low mortgage rates
Source: Property Insider
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