UK Rental Costs are Rising
The state of the UK rental market has been a topic of keen interest for the last 12 months and continues to be so. The shortage of rental property is continuing and does not look like abating in the coming months, especially in the lead up to the London 2012 Olympics.
Association of Residential Letting Agents (ARLA) has reported recently that during the second quarter of 2011, three quarter (74%) of members across the UK reported that they were coming across more prospective tenants than available properties. This situation is even worse in London, with that figure coming in at 82%. This is in comparison to the same survey taken 2 years ago which suggested that only 10% of ARLA members were seeing such a shortage and this figure fell to only 8% in central London – so we really have come full circle in 24 months.
So what is the reason behind this? Much of the problem lies with the availability of rental stock. Increasingly, first time buyers, who are unable to save sufficient amounts for the required 10-15% deposit on their own home, are living in rented accommodation for longer – according to an article in moneysupermarket.com, the average age of a first time buyer has increased to 38 in 2010 across the country, but rising to 43 years old in London. The unavailability of affordable mortgages is another factor which is not helping the situation.
There is also the challenge of less choice of properties to purchase, according to an article by Savills, which is also having an impact on the number of households continuing to stay in private rental property. According to a leading estate agent, in some areas, rental property stock is also down 20% since the beginning of 2011.
So as a consequence of this, it is very much a “landlord's market” and rents have increased by as much as 15% in some desirable locations. Competition for properties is fierce, with rents often being agreed within 5 % of the asking price.
Therefore, Team’s advice to both our corporate clients and to relocating employees, is to be flexible and open to compromise on their housing requirements. With a number of people potentially vying for the same property, landlords will take the least line of resistance and go with the option which is closest to their desired rental amount and with the shortest “wish-list”. Team has also consulted with a number of companies to review their housing allowances and desired locations for the employees to move into.
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