PayProp Rental Confidence Index uncovers rising rents and intense competition.
The latest PayProp Rental Confidence Index revealed rising rents and fierce competition among agents for both properties and landlords, while also ringing alarm bells about the future of the sector.
PayProp polled letting agents, administrators, business owners and other property professionals from across the country in our latest industry survey, and their responses point to an ongoing supply shortage in the private rented sector.
A massive 72.8% of respondents said they had implemented higher-than-usual rent increases in the past year, and 64.3% expected landlords to raise rents again in 2023.
And it looks like they’ll have the flexibility to do so: properties that come onto the market are being snapped up quickly by tenants despite record rents. Some 37.7% of agents said newly-listed properties were taken within a week, while just under 40% said it took between one and two weeks.
Is it sustainable?
Tenants are paying more than ever for a place to live, but so far they have mostly been able to. More than 60% of lettings professionals said arrears were the same as usual, while a smaller percentage than in 2021 said they were higher than usual.
The bigger issue for the sector is on the side of landlords. Despite rising rents, 49% of agents reported more landlords are selling properties than adding to their portfolios – the first time this balance has shifted in the history of the Rental Confidence Index. In turn, 44.6% of agents said signing new landlords and rental stock was their biggest challenge for 2023, making it the top challenge among survey respondents.
According to Zoopla, 11% of all properties on the market are being sold by landlords leaving the sector. That’s not the highest figure ever recorded: in 2020, buy-to-let properties made up 14% of properties for sale. But only a third of sold buy-to-lets are coming back into the rental market – well below the 50% of five years ago.
The concern for agents now is that the Renters (Reform) Bill will be the last straw for even more landlords. Just under half of the agents we surveyed said they felt “negative” or “very negative” about the incoming regulations. If they’re right about the impact of the new rules, the shortages could get even bigger.
Read the full PayProp Rental Confidence Index to get agents’ thoughts on profitability strategies, technology, working from home and more.