Lettings market comment July 2011

Wednesday, July 20, 2011 by Douglas And Gordon

Lettings market comment July 2011

According to the Association of Residential Letting Agents (ARLA), research out today, during Q2 2011, 82% of members in Central London reported that there were more prospective tenants than properties available.

By comparison, just two years ago, the number of members reporting an undersupply of rental homes in Central London was 8%.

So the inbalance of supply and demand continues, with no indication of this demand weakening. Many people are turning to renting as a more flexible option than buying, having found a property tenants are typically remaining in occupancy for longer periods. There is a shortage of good new stock coming onto the rental market which is forcing rents to continue to rise. D&G's research shows that rents across our network of London offices rose by 6.9% since April of this year.

In order to secure a property, tenants are increasingly prepared to lock in to two or three year contracts without break clauses. In the past, tenants would have wanted more flexibility - so they had the option to perhaps buy a property at some point or just move to a different rental property. With comparable rents increasing, lack of choice and the cost to move factored in, tenants are opting to remain in their existing rented accommodation.

To work towards a solution, Government needs to look seriously at ways of incentivising investment into the PRS to increase the number of properties available to rent. At the same time, it needs to look at ways of regulating what is becoming an increasingly popular housing option, so that consumers and landlords are protected from issues such as loss of rent monies and deposits. ARLA, of which D&G is a member, has worked very hard over the years to raise standards in the industry as well as consumer awareness. Membership, which numbers some 6000, is only offered after passing a technical exam. In addition, all members have to abide by rules and Principal Partner and Director Members also have to comply with strict requirements in respect of their client accounts and professional insurance. ARLA also insist that member firms belong to an Independent Ombudsman Scheme.

Perhaps one of the most important requirements of these member firms is that they have to belong to ARLA's Client Money Protection Scheme. This compensation scheme means that in the event of one of their member companies closing down owing Clients money, the consumer is compensated by ARLA within scheme limits.

So, with a booming lettings industry, there are more and more amateur letting agents out there and anyone in the business has to understand that the technical and legal knowledge required grows by the day. In fact, there are over 100 different laws and regulations that you could come across and therefore it is important landlords and tenants chose a licensed ARLA Agent like D&G.

Virginia Skilbeck

Lettings Director