Brexit uncertainty fuels rental demand
Continued political and economic uncertainty is likely to fuel increased tenant rental demand in the private rented sector, says Haart.
The company’s latest figures show the number of tenants entering the market across England and Wales has risen by 17.4 per cent year on year – and is up by 24.6 per cent in London.
However, the number of new landlords registering to buy has dropped by 37 per cent over the same period in the UK and is down by a remarkable 60 per cent in London, putting pressure on the availability of properties to rent.
Paul Sloan, operations director for Haart, says: “In uncertain times, the private rented sector can provide some certainty and security for those who need to move home, with fixed rent over a fixed term helping tenants to manage their budgets and plan their lives accordingly.
“This is reflected in the fact that we’re seeing significant increased rental demand compared with this time last year – making buy-to-let property an attractive option for those looking for a reliable return on their investment.
“Unfortunately, this increased demand is still set against a backdrop of reduced supply. It would be good to see some active encouragement from the government for the sector to attract new investors to enter the market.”
The agency has been calling on the government to rethink policies which harm the rental sector, such as the additional three per cent stamp duty charge on second and buy to let homes, which has been imposed on landlords since April 2016, and tax relief changes which are currently being phased in and which will hit profitability for higher rate tax payers and those with high mortgage costs.
It’s also thought that uncertainty over Brexit and the wider economy means that potential homebuyers and landlords are putting off investing until there’s a clearer picture of what the year ahead will bring.
In this climate, Sloan says the political activities of the coming weeks have the potential to stabilise the market.
He says: “We could expect a super-charged property market in 2019 if a positive Brexit deal is agreed. With a strong deal in place, confidence would fuel the market upwards, turning instructions into transactions.
“Political stability is crucial for a thriving housing market – and for this we need a stable government. If a leadership bid were triggered we could risk creating further uncertainty in the market.
“In my opinion the greatest threat is continued uncertainty because of political posturing. Whilst a ‘No Deal’ scenario would potentially be quite damaging, an extended period of Brexit negotiations beyond the set date of March 2019 could prove just as detrimental.”