"The situation in the Private Rented Sector gives great cause for concern as supply continues to drop."
Supply of rental properties coming to market has fallen for the 21st consecutive month, according to the latest RICS UK Residential Market Survey.
Anecdotal remarks, unsurprisingly, draw attention to role the change in tax treatment on investment property has played in driving this trend. The Rent Expectations series is pointing to a cumulative average rise of around fifteen per cent over the course of the next five years.
The survey also found that sales activity in the UK housing market remains subdued and any improvement in new properties coming to the market is "likely to be very short-lived".
In June, newly agreed sales recorded the sixteenth successive month of continued decline and RICS believes this continued decline in newly agreed sales suggests that the softer trend in sales volumes will not improve over the coming months.
The number people looking to buy also remained flat in June, prolonging the trend which dates back to late 2016. RICS says this is likely to persist through the second half of the year with the time taken to complete a sale edging up from around sixteen weeks in 2017 to around eighteen weeks at present.
For the second month in a row, new instructions have risen, with 10% more respondents seeing an increase in the flow of properties being put up for sale. However, with average stocks remaining close to historic lows at 43, RICS believes it would be too early to suggest that this issue is lessening as an obstacle.
Looking ahead, sales expectations are mildly positive for the coming three months, but at the twelve month point chartered surveyors are more cautious, with the net balance slipping to zero for the first time since last October.
The lack of activity on the sales side also continues to impact prices. At the headline level they remain flat in June, and it is the thirteenth consecutive month that chartered surveyors have reported a sluggish picture, with respondents not anticipating much change in the coming three months either.
Geoff White, RICS policy manager, commented: “This is one of the most complicated market situations that we have seen in some time, and with some of the working policy solutions taking a long time to get to market we’re seeing a difficult situation get worse.
“The situation in the Private Rented Sector gives great cause for concern as supply continues to drop. It would appear that new policy on taxes and Stamp Duty have made it so difficult for landlords at a time when the UK needs more homes to rent, that many continue to exit the market. A standardised set of regulations would go some way to help ease the life of both those renting and those looking to let, and RICS continues to ask government for greater regulation through adopting the Code of Practice used by RICS professionals and others.
“In the meantime, the government also struggles to reach its house building target. The revised National Planning Policy Framework is to be announced soon but few hold out hope it will achieve its aim of significantly speeding up planning applications and actual delivery. The Prime Minister also tasked Sir Oliver Letwin to review build out rates and alleged land banking. His interim report suggests building a greater mix of tenures – including PRS – is the answer, and we look forward to the final recommendations.
“Faced with the uncertainty around Brexit, recent government changes and a shortage of skilled trades such as bricklayers, as identified by Sir Oliver Letwin, and you can see how the new Housing Minister Kit Malthouse – the eighth person to have that title since 2010 – has his work cut out.”