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Tenants’ tight finances put brakes on rental sector – ARLA
Demand in the rental sector may have peaked in 2011, as tenants struggle to meet rental payments, according to the Association of Residential Letting Agents (ARLA).
Its research revealed that tenant demand in Q4 2011 remained strong, but was sharply down on the previous quarter, with 55% of members reporting more tenants than available properties in Q4 compared to 74% in Q3.
ARLA said that, while the drop could be attributed to the traditional seasonal slowdown before Christmas, it could also signal a reversal of the surge in tenants unable to buy into the private rental sector, as their finances continue to come under strain.
During Q4, 39.2% of ARLA members reported an increase in tenants struggling to pay rent, up from 36.7% the previous quarter.
Nevertheless, the number of new tenancies being signed remained stable in Q4, with an average of 34 per letting agency. Central London recorded the lowest figure at 26 new tenancies signed, down from 31 in Q3.
Tim Hyatt, president of ARLA, said: “With household income decreasing and job uncertainty prevailing, it could be that increasing rental arrears is a sign that the wider economic malaise is having a tangible impact on personal finance.
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“Some consumers may have reached the limit of their access to finance, while others may be cutting back as many commentators have predicted.
“We are reassured by the fact that the number of new tenancies is stable, but we will be watching the market closely in the coming months to determine how significant these latest figures will prove to be.”