Tenant demand dropped in Q4 2011 say ARLA

As well as a drop in tenant demand, the number of rental arrears increased in the fourth quarter of last year, which has prompted some to claim that the rental market has now peaked.

 

According to research from the Association of Residential Letting Agents (ARLA), 55 per cent of ARLA members reported more tenants than properties available. Although this figure is still strong, it is a sharp decrease from the previous quarter, in which almost three quarters of ARLA members had more tenants than properties. It is a very steep decline, but landlords are being urged not to worry as the fourth quarter is traditionally quieter than the rest.

 

“The apparent drop in demand for rental properties could be due to the traditionally quiet pre-Christmas period,” said Tim Hyatt, president of ARLA.

 

“At the same time, it could indicate a reversal of the surge of new tenants who turned to the private rented sector when they could not afford to buy.”

 

The number of people signing a new tenancy agreement actually remained consistent within the third quarter, with an average of 34 new tenancies signed per ARLA member office.

 

But the drop in demand, coupled with the increase in rental arrears, is a cause for concern for some landlords.

 

The research found that 39.2 per cent of ARLA members saw an increase in tenants struggling to pay rent, up from 36.7 per cent in the previous quarter.

 

“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,” said Mr Hyatt.

“Some consumers may have reached the limit of their access to finance, while others may be cutting back as many commentators have predicted,” he added.