The period of slow rental growth is set to end as the tenant fee ban rapidly approaches, Belvoir agents have warned.
Its franchisees have predicted rents will start to rise due to the fee ban after reporting a “relatively flat” period of rental inflation for 2018.
Data from Belvoir shows that its offices that have traded for more than a decade reported a 1.25% annual drop in rents in England, Scotland and Wales at the end of last year to £742 a month.
All its offices, including new ones, saw an average increase of 1% year-on-year to £800 per month for the fourth quarter of 2018.
However, anecdotal evidence shows agents believe the fee ban is set to cause a rise in rents.
For example, one franchisee, Jeremy Clarke of Belvoir Christchurch, predicted rents will rise in the future due to the lack of supply, coupled with remaining landlords incurring additional costs because of the tenant fee ban and taxation.
The analysis – based on activity across Belvoir’s franchise network – found that tenants are remaining longer in properties, with a slight increase in the proportion of tenants renting 13-18 months and over two years.
Almost two thirds (64%) of offices carried out no evictions in the fourth quarter, up from 54% in the third quarter of 2018, and half of Belvoir’s offices reported fewer than three tenants in arrears.
Dorian Gonsalves, chief executive of Belvoir, said: “Historically during times of political uncertainty, as is being currently experienced, Belvoir offices have observed a rise in the numbers of families renting properties, as they wait to see the impact on the market and their personal situation.
“In recent years there has also been a shift in the corporate relocation market, with employees opting to rent out their existing property instead of selling, and then renting a house in the new area.
“This has resulted in less rental houses coming onto the market, with increased demand for those properties that are available.
“As political uncertainty continues it will be interesting to see how the private rented sector will be affected throughout the rest of 2019.
“After a relatively flat period of rental inflation we are predicting that rents will begin to increase at a faster rate in the second half of the year, as landlords and tenants begin to feel the effects of increased costs, which are a direct result of the tenant fee ban.”