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James Gibbs and Paul Gillespie explain more...
Tenants bracing themselves for higher rents
Date: 31st August 2011
Tenants are anticipating further rent rises, with one in six expecting rents to go up by more than 10% over the next 12 months.
A new Rightmove survey found that over half (53%) of all tenants expect rents to rise, including 17% that predict rents will be more than 10% higher.
Both figures are the highest Rightmove has recorded in the last two years of its regular consumer surveys.
Tenants’ sentiment is also changing. In Rightmove’s last survey, half of tenants (50%) were forecasting rental price stability in Q3, but now just a third hold this view (35%).
Rightmove director Miles Shipside said: “Tenants’ pain is a landlord’s gain.”
He added: “In spite of the rising rent environment of the last two years, the majority of tenants still expect to pay even more a year from now.
“The rental ceiling of what some tenants can afford to pay appears to have some headroom left, despite their disposable incomes being squeezed from all sides.
“But there are consequences to an over-inflated rental bubble. Overstretching tenants’ finances beyond what they can sustainably afford will lead to a damaging growth in arrears and void periods.”
The survey also found that while 14% of investor landlords are expecting to buy in the next year, this is only just up on the 11% recorded a year ago – indicating an ongoing lack of rental supply.
A total of 5,356 responses were received to the survey.
Paul Gillespie, Founding Partner of multi award winning sales and lettings agent, Gibbs Gillespie said: “The market is driven by supply and demand and, for the foreseeable future there will be an excess of demand over supply and therefore rents will continue to rise.
"Whilst we will always seek to obtain the best rent for a landlord client, we also look to ensure that the quality of the tenant is of the highest order. There are stories from around the country of increasing cases of rental arrears and the need for thorough referencing and credit checks is paramount.
"Most of our landlords at renewal are seeking a modest increase in rent, preferring to keep a good tenant rather than face the uncertainty of losing a tenant and the possible risk of a void period by being too ambitious on a rental figure.”
For further media information, please call Jo Ryan on 020 8869 9863.