There has been a reported spike in tenants looking for a new home since the tenant fee ban was introduced in June of this year.
According to figures from Rightmove, there was a 7% rise in the number of tenants looking for a new home between May and June – that’s seven times higher than during the same period last year. In London alone, there was a 13% increase in demand, compared to the four-year average of 4%.
As these figures coincide with the introduction of the tenant fee ban, which came into effect on the 1st June of this year, the two trends could be linked. The research suggests that tenants are starting their property search earlier than usual, as the number of people looking for new homes usually peaks around mid-July. It appears that the potential to save hundreds of pounds now that most tenant fees are outlawed has motivated some to look for a new home sooner.
With a growing number of tenants looking for a new home, there are also fewer properties available on the market. Melanie Howarth, a branch manager at Northwood Letting Agents in Doncaster, saw a 17% rise in the amount of house hunters enquiring to view a property compared to the previous year. She also found that the volume of enquiries for each property had increased.
Howarth 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.’
As a result of the growing demand, rents have also started to rise throughout the country. Nationally, the asking rents in the UK (excluding London) reached an all-time high in quarter 2 of 2019 at £817 per calendar month. This is an annual rate of 2.7%.
According to reports from Hamptons International, southern regions saw the biggest rise in rents. Greater London saw an annual rise of 4.3% and the South West and South East saw annual growth of 4.5% and 3.6% respectively.
Responding to the results, Miles Shipside of Rightmove 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.’
These findings should certainly appeal to buy-to-let investors, regardless of whether they are looking to buy or sell their property.
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