In the wake of Britain’s exit from Europe, a Belvoir survey reveals that almost three quarters of franchisees anticipate rental increases throughout 2020.
“Belvoir commissioned media property expert Kate Faulkner to survey a representative cross-section of Belvoir franchisees in England, Scotland, Wales and Northern Ireland,” says Belvoir CEO Dorian Gonsalves. “The results show an overwhelming 72% of offices predicting rent rises in 2020, with almost a quarter expecting rents to be static and just 6% anticipating that rents will decrease in their area.
“The reasons stated are the tenant fee ban, combined with punitive tax changes and ever-changing costly regulatory demands that have resulted in landlords incurring considerable additional charges. As Belvoir has noted in the past, rent increases vary from region to region, with some areas encountering resistance as rents are typically capped by wage growth and where supply exceeds demand.
“Belvoir offices in Westminster, Wembley, Wood Green and Queens Park, predict that now the uncertainty over Brexit has passed, rents are likely to increase by around 1-2%. Six Belvoir offices surveyed in the South East, with the exception of Maidenhead, all predicted rental increases.
“In the South West, David Devlin, owner of Belvoir Devizes said: “The Tenant Fees Act (TFA) put all new and renewing tenancy costs on landlords, who are understandably recouping those costs in terms of higher rents. Coupled with punitive changes in taxes and ever increasing regulatory demands, landlords are being driven out of the sector, which is reducing supply. Add to this steady and increasing demand and this will obviously have the inevitable effect of rents rising.”
In Yorkshire, the market is buoyant due to a successful local economy, with franchisees forecasting static to rising rents. Chris Duffy, owner of Belvoir Doncaster said: “The local economy in Doncaster is thriving. A strong demand plus a shortage of stock is leading to rent increases. The distribution sector is thriving; Amazon, Next, Ikea, Lidl, along with companies such as Siemens. Companies are finding it hard to fill vacancies, leading to wage growth. There is a shortage of good quality properties of all types with the exception of single room accommodation. These two factors are resulting in landlords being able to charge higher rents for good quality properties. Most properties are letting on the first day of viewings.”
Glenn Broadwell of Belvoir Leeds North West said: “Legislation, coupled with landlords now feeling the full effect of losing mortgage tax relief, will see landlords asking more for valuations to exit the market. We have already had more valuations this year, and a landlord has put their property on the market asking us to serve notice on two tenants in a shared property.”
A similar picture is revealed in the North East, the North West, Wales and Scotland. Rob Price, owner of Belvoir Cardiff is expecting rents to increase and said: “Void periods are short, demand is high and many investors are leaving the market. We expect this to continue through 2020, leading to increased rents.”
Nick Horan of Belvoir Dundee reported a general reduction in the number of rental properties due to legislation and taxation, while tenant demand remained the same.
Commenting on the results of the survey, Dorian Gonsalves said: “Although the government is trying to help tenants, reducing supply when demand is increasing is resulting in rents rising in those areas where tenants’ wages are increasing more than inflation. This means that although tenants may be getting more rights, it is coming at a cost,”
“Moving forward, what is important is for the government to implement a fair system that works for both landlords and tenants. Failure to do so is likely to result in a shortage of new rental properties, making it more difficult for tenants to find an affordable home. “