Surge in tenant demand since Tenant Fees Act
There has been a surge in tenant demand, with people waiting until the tenant fees ban came in on 1 June before entering the market, the Rightmove Rental Trends Tracker has found.
The change in national tenant demand between May and June is usually muted, and was about 1% over the past four years, but this year the uplift is 7%. Some would have been given a reason to move by the removal of most tenant fees, giving them a saving of hundreds of pounds in some cases.
Miles Shipside, Rightmove’s commercial director and housing market analyst, said: “A spike in tenants looking for a new place to live indicates some unsurprisingly held out until fees to start a new tenancy were removed by the government at the start of June.
“The ongoing shortage of quality stock could end up being exacerbated further by landlords whose tenants are now giving their notice so they can move on without paying fees, and some of those landlords then choosing to sell up rather than let it out again.
“Asking rents are at a new record, rising at nearly 3% a year as demand for quality properties outstrips supply.
“However, the rise in rental prices may also mean some agents or landlords have attempted to raise rents to help compensate for a loss of tenant fees. More build to rent developments with more premium offerings and rents could also be adding to the average increase.”
The figures could suggest people are looking to move earlier than usual, as the peak in demand usually comes in July.
Richard Davies, head of lettings at Chestertons, added: “We’ve seen a 17% increase in the number of tenants registering to view properties since the tenant fee ban came in on the 1st June compared to the same time last year.
“This spike in demand from tenants has meant that there has been a lot more competition for rental properties, and tenants are often paying above asking price to secure their first-choice property.
“Paying over asking price for rental properties in the peak summer lettings season is not too unusual in London, but we have noticed that tenants are more prepared to do so since the fee ban came in, potentially because they feel they are saving money on additional fees so can afford to spend a little more on their monthly rent to secure the right property.”
The rental stock shortage of the last few years, along with this increase in demand, means tenants are likely to find the next few months more challenging to find the right property for them.
Average asking rents outside London hit at an all-time high of £817 per month in Q2, with the annual rate of 2.7% showing the same steady rise for the last three quarters.
Melanie Howarth, branch manager at Northwood in Doncaster, said: “We’ve seen a massive increase in enquiries and we’re having to do everything differently now, such as arranging to meet lots of tenants at a property all at once.
“We’ve seen such an influx of interest, I’d say every property is seeing double, maybe triple, the levels of interest that it would have received prior to the tenant fee ban being introduced as it’s now cheaper for tenants to move around from property to property.”