Rents will rise and letting agents may quit the industry following the Government’s attack on the private rental sector, warns the boss of 300-outlet franchising chain Belvoir.
Dorian Gonsalves explains his concerns: “Agents nationwide have been predicting that rents are likely to rise considerably faster than house prices, and Belvoir is forecasting that rents are likely to rise by up to 15% over the next three years.
“This rise in rents, which will of course vary from region-to-region, is primarily due to a raft of recent anti-landlord Government policies in the past year, which include increasing Stamp Duty costs, introducing tougher mortgage lending criteria, and removing mortgage tax relief for landlords, which could see many landlords making a loss.”
He continues: “In addition, the Government’s failure to increase the availability of social housing for rent has resulted in a real shortage of good quality rental accommodation in the private rental sector.
“Although the Chancellor confirmed in his Autumn Statement that upfront tenant fees are to be banned, the full details have not yet been clarified and no timescale has been given. Until these details have been finalised, which could take many months, it will be very much business as usual.”
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Gonsalves says that many franchisees are looking at ways to protect their businesses: “We already have over half of the Belvoir network offering an estate agency service, and I predict that this number will grow considerably in the year ahead.
“Throughout 2017, Belvoir will continue to work with decision-makers and we hope that some of the Government’s recent changes will either be reversed or incentives will be launched to help drive up the supply of rental properties. This would then bring down rents and benefit millions of tenants, making for a healthier rental sector.”
He believes: “People from all walks of life, including students, migrant workers and professionals with families, are struggling to meet stringent lender affordability ratios. When someone is not in a position to buy, they obviously start looking for somewhere to rent, but, unfortunately, Government polices seem to lack any direction and have done nothing to benefit either landlords or tenants, so tenants could find it more difficult to find good quality suitable accommodation this year and beyond.”
He adds: “I also think that a number of independent agents may seek to exit the market during the year.”
Gonsalves says that if they do, Belvoir franchisees could be interested in buying their businesses: “Belvoir will be continuing its acquisition programme, looking for opportunities for our franchise owners to help them increase their market share. Belvoir has learned a lot from our Scottish offices, where tenant fees are already banned.”
He looks ahead: “I predict that this year will be one for agents to adapt and change, as the impact of the Government’s recent anti-landlord policies take effect and the market readjusts.”