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News: Tenant frenzy fuels rental boom

Mon, 17 Sep 07

Tenant demand now outstrips supply in all areas of the rental market, even as private landlords continue to invest in the sector...

This is revealed in the latest quarterly survey of ARLA member letting agents published today (Tuesday 11 September).

The quarterly ARLA surveys are the largest of their kind in the Private Rented Sector and ARLA believes that the results this quarter are consistent with the traditional cycle of softening house prices leading to increased rental demand.

Achievable rent levels are reported to have risen in all areas. This continues the trend that began at the beginning of 2007 and rent levels are now reported as being at an all time high.

Higher average rents

Despite the continuing rise in property prices, the increase in achievable rents has led also to a growth in the return on the asset value of houses, although the return on flats remains unchanged.

In the three months to the end of August, average rents for houses ranged from £819 a week in prime central London, through £345 across the South East to £230 in the rest of the country. For flats, average rents were £525 in Prime Central London, £215 in the South East and £150 in the rest of the country.

In all the regions, the average rents achieved for houses is more than half as much again – between 53% and 60% higher - as the average for flats, although the increase in rents achieved over the three summer months averaged 6% overall for both houses and flats.

With more than half of all ARLA members saying that rents have increased in a single quarter, this figure is now standing at an all time high.

Traditional cycles

Nearly three quarters of all tenants, 73%, stay in the same rented property for between ten and 18 months, leading to an average tenancy of 16.3 months. The longest tenancies are in Prime Central London at 17.7 months, followed by the South East at 16.5 months and 15.4 months for the rest of the country.

The overall average void rate over a year is 23 days. This continues a trend of declining empty periods from the average of 31 days during the winter of 2003/2004.

Commented Ian Potter, newly appointed ARLA Operations Manager, “These figures are consistent with the traditional cycles that are always underlined by the Private Rented Sector when house prices soften. Demand for rented accommodation rises. Once again, the sector is acting as the only viable safety valve for housing as a whole and bridging the gap between owner-occupation and the various provisions for social housing.”

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