Ian Potter, ARLA Head of Operations, said: “This suggests that the oversupply of new-build flats in some areas may be coming to an end as local authorities, housing associations and bargain hunters take up the slack. This has also helped to stabilise rents in some areas.”
The average weighted value of houses to rent is £400,400, down from £414,800. There are big differences by area. The average value for prime central London is £828,900, compared to not much more than a third of that in the South East at £306,000, and around a quarter, £221,800, in the rest of the country.
Overall, the average fall in value of houses in the rental market is 8.3% in the past year.
For flats, the weighted average for prime central London is nearly half a million, compared to £191,400 in the rest of the South East and £144,300 in the rest of the UK.
Overall, average values for flats have fallen by 10.6% in the past year.
With increasing numbers of “Reluctant Landlords” coming to the rental market while waiting for a better time to sell, there is an oversupply of property to rent. This is particularly noticeable in prime central London.
There, average weighted rents for houses are down by 2.5% over the quarter, largely driven by the decline of 8.1% in the prime central London market. This compares with small increase of 1% in the South East and virtually no change in the rest of the country.
Average rents for flats are down 9.3%. Again this is a result of falls in London and the South East. Away from the South East, rents have dropped by an average of only 2%.
“These falls are inevitable given that so much of the London market is driven by the international financial services industry and the ripple effect this can have on the market generally,” Potter said.
Average monthly rents for houses range from £3,177 in London to £924 away from the South East. For flats the range is from £2,051 to £553.
The majority of tenants continue to stay on in a rental property for well over a year, with nearly three out of five staying in place for more than 18 months. Despite these extended stays, which have been a feature of the market for three years now, the number of new tenancies arranged through ARLA member letting agents also remains virtually constant, at an average of 36 new tenancies this quarter against 38 last quarter.
Four-fifths of all respondents believe that immigration from the new EU counties continues to have an effect on the rental market, with more than a quarter saying that this effect remains “Significant.”
The data for the fourth quarter ARLA Members Survey of the Private Rented Sector, is drawn from 488 lettings offices.
The survey is supported by the ARLA Group of Buy to Let Mortgage Lenders: Bank of Ireland Mortgages, Cheltenham & Gloucester, GMAC RFC, Mortgage Express and Paragon Mortgages. Together with the Survey of Landlords this survey forms part of the quarterly ARLA Review and Index.
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