Harrogate’s rental market hits crisis point due to low stock and high property prices

By Gemma Jimmison
Thursday, 24th March 2022, 10:07 am

Lettings agents are seeing an increased demand for homes in the town - despite the average rent per month reaching £974.

Guy Wigginton, director of R&W Lettings in Harrogate, said: “The rental market is absolutely ballistic at the moment.

“We had one property last week with 30 viewings within the first few days of listing. There’s not enough availability at the moment.

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“Prices are sky high. There’s not much change from £1,000 for a three-bed semi, and even for a two-bed terrace, renters are looking at £750-plus a month. For a detached four-bed, you’re talking £2,500 a month in rent. I don’t think the costs of living rises, fuel costs etc, have really hit people yet - people are still desperate to find properties.”

According to a new report, Yorkshire and The Humber will need almost 12,000 new private rented homes a year to meet its housing needs.

The report - by Capital Economics for the National Residential Landlords Association - states that if owner occupied and social rented homes in the UK continue at their ten-year average rate of growth, private rented sector supply in the region would have to increase by 11,900 properties per year to meet Government targets.

Additional survey data by the research consultancy BVA-BDRC suggests that across the region 75% of private landlords saw an increase in the demand for homes to rent in the last quarter of 2021. This was up from 63% over the previous quarter.

Meanwhile, the private rented sector has come under increasing pressure from a range of Government policies which make the sector less attractive to prospective investors and current landlords. These policies include tax changes for Buy to Let landlords; changes to the Stamp Duty Land Tax which disincentivises the purchase of additional properties; the reduction in Capital Gains Tax on assets excluding property to incentivise investment into assets away from the rental sector; and a ban on letting agents’ fees to tenants, a cost which could be passed on to landlords.

As a result, Government figures show that the supply of private rented housing in Yorkshire and The Humber has fallen by 15,000 over the past five years.

A rise in short term lets, such as AirBnB, has also led to a shortage in the long-term rental market.

Capital Economics sets out how, in order to meet targets for housing supply, the Treasury needs to encourage investment in the sector.

This includes increasing the rate of new builds and switching commercial property to residential use. The report also points to the contribution the sector can make in moving stock from short term to long term lets and bringing empty homes back into use.

Mr Wigginton added: “We are building a lot of houses in Harrogate, but I’m not sure how many of them are classed as affordable, and they are all to buy rather than rent. It would be nice if this problem could be addressed.”

In Harrogate, there are just 179 homes available for private renting - yet Harrogate Borough Council has around 1,800 households currently on its housing waiting list. And in Ripon, there are only 45 rental properties up for grabs, at an average monthly rent of £740.

As well as Government policies, the heightened demand can also be partly attributed to the current state of the sales market - the average property price paid in Harrogate last year rose to £395,526.

That’s an increase of £34,000 over the last year, with Harrogate now placed as the 35th most pricey postcode area out of 105 England and Wales’ areas. The town is also seventh among Yorkshire and the Humber’s 21 local authorities with price data for annual growth.

The National Residential Landlords Association report states that increasing house price to income ratios and tighter lending conditions have made it more difficult, particularly for first time buyers, to purchase a property.

Mr Wigginton said: “One of the problems is the price of the sales market, and that interest rates have been historically low for the last few years - we saw people who were saving for a deposit for a house, they had £30,000 and suddenly they find they need £30,000 more just for a similar property. They can’t afford to buy. It has a knock on effect for the rental market.”

Ruth Millington, Yorkshire and The Humber Representative for the National Residential Landlords Association, said: “As the demand for private rental properties continues to increase, renters across the Yorkshire and The Humber will struggle to find the homes they need and can afford as supply continues to fall.

“We have repeatedly warned the Government in recent years about the impact of their policies. These figures show the pressing need for a different approach to stimulate growth in the private rented sector across the region to supply the homes that people want and need.”