The RLA is rejecting alarmist rent data published today. Figures produced by LSL suggest that over the past year, rents across England and Wales have increased by 1.4%.
This data however is undermined by the more comprehensive and independent data from the Office for National Statistics showing rents between March 2013 and 2014 have increased by just 1% over the year whilst inflation as measured by RPI was 2.5% and by CPI at 1.7% over the same period.
The RLA is also distancing itself from LSL’s assertion that landlords are making substantial returns.
Official figures show that 79% of all landlords earn less than a quarter of their income from letting properties with 21% earning no income at all from it.
This was confirmed by the findings of a report for the RLA by Professor Michael Ball of Reading University who has concluded:
“that current returns in the private rented sector are extremely low and are likely to remain so. The resultant damage to the private rented sector could be huge, because the availability and cost of privately rented accommodation depends on landlords’ making viable returns on their investments.”
More recently, an analysis by the Daily Telegraph has warned also that a number of buy-to-let landlords “could see their cash flow turn negative as early as 2017 if interest rates rose to the levels hinted at by the Bank of England Governor, Mark Carney.”
Responding to the LSL data, RLA Vice Chairman, Chris Town said:
“Whilst many have chosen to cherry pick the data on rents they want to use to suit their argument, the reality is that the most comprehensive, ONS data shows clearly that rents are increasing by much less than inflation. Whilst there are some pockets of the country, especially in London, where rents are increasing substantially this is as a result of a chronic lack of supply of homes to rent, not landlord profiteering. It would be wrong and dangerous to make assumptions for the whole country based on London and the South East Alone”.
Turning to LSL’s assertions on landlord returns, Chris Town continued:
“On returns, LSL’s figures fail to outline the considerable costs that landlords face in managing, maintaining and repairing properties. With interest rates likely to increase in the near future prospects for landlord finances remain uncertain.
“The reality is that landlords have to make some return to cover their costs. The question for those who spend so much time bashing landlords is what return they feel is reasonable for landlords to make. Only then can we have a sensible debate.”