Supply levels of rental properties on the rise

According to the latest quarterly report from the Association of Residential Letting Agents, supply levels in the private rental sector is showing some signs of improvement although high demand means competition for consumers will remain “fierce”.

ARLA has highlighted a rise in the average number of buy-to-let properties managed by ARLA members in the last three months, from 135 properties in the third quarter to 148 properties this quarter – an increase of almost 10%.

ARLA members believe the number of landlords increasing their investment in buy-to-let properties was driving the improved outlook for supply in the private rented sector, with the number of landlords purchasing properties now exceeding the number selling their investments – a reverse on figures reported three months ago.

Those landlords increasing their investment in buy-to-let properties rose from 27% to 30% in the last three months. Meanwhile landlords looking to sell their current buy-to-let investments fell 9 percentage points, from 32% to just 23%.

Although the increase in available buy-to-let property is a step in the right direction for the private rental market and good news for renters, the bad news is that demand still strongly outweighs supply. 65% of ARLA member agents said there were still more would-be tenants than properties available on their books, a decrease from 68% last quarter, suggesting that the market could be heading towards a more level playing field.

David Cox, managing director of ARLA said: “This quarter we’re seeing promising signs that the market is taking small steps towards achieving a better balance between supply and demand, or at least it is easing slightly. With more landlords investing in their portfolios, ARLA members have reported a growth in supply, while the level of demand witnessed last quarter has fallen slightly. Of course, the market has a fair way to go in terms of completely balancing out.”

The increase in supply is down to more investment in buy-to-let property; however a number of ARLA members also reported an increase in rental property coming back onto the market following failed attempts to sell, rising for a second consecutive quarter, from 16 per cent to 24%.

As supply and demand levels ease, tenants are taking advantage of the slightly less competitive market – as the number of would-be tenants haggling with landlords over rents increased from 32% to 35% over the past six months.

David added: “It’s great to see an increase in consumers making an active play to agree on rent prices. Letting agents should be able to help tenants to get the fairest deal, and to ensure the process of finding a property, and signing on the line, is as smooth a process as possible.”