Demand for rental properties held steady in July following a strong rebound in the first two months after the Renters' Rights Act came into force, according to Chestertons' latest monthly lettings survey. Separate data from Rightmove shows asking rents in London are now rising faster than in the rest of Great Britain for the first time in almost three years.
Portal enquiries, typically the first indicator of shifting tenant demand, fell 7% year-on-year in July. That follows increases of 17% in May and 10% in June, the opening two months of the new legislative regime.
The July dip also comes after five consecutive months of declining enquiries before the Act took effect, pointing to a market that is beginning to find its footing after an initial burst of post-legislation activity.
One consequence of the Act highlighted by Chestertons in its June Lettings Report may be feeding through into landlord pricing behaviour. Because the legislation prevents landlords from accepting offers above the advertised rent, some appear to have responded by testing the market with higher initial asking rents.
The data on rent reductions supports that reading. In May, the number of landlords reducing asking rents fell 36% year-on-year, reversing several months in which a growing proportion had lowered rents. June saw a partial correction, with rent reductions rising 6% year-on-year, but July's figure of just 1% suggests landlords are becoming more settled in their approach to initial pricing.
"Activity seen immediately after the legislation was introduced in May eased off in July, however, in the first ten days of August our branches have seen applicant registrations up 18% year-on-year, which is in line with the seasonal summer uptick we would expect at this time of year," explained Katinka Hill, head of lettings at Chestertons.
