A report by Vouch & Goodlord has found that a growing number of landlords are leaving the market, prompting a lack of rental properties.
The report found that 83% of agents have seen landlords leave the sector in the past year and 64% believe the coming year will see more exit.
The lack of rental properties on the market was listed as a top concern by a third of agents.
Respondents say that the combination of the stamp duty holiday pushing up prices and mounting regulation has driven some landlords to cash in their portfolios.
The number of agents who said winning new landlords was their main priority has reduced from 44% in 2020 to 27% in the latest poll, indicating that many in the sector are looking to increase revenues from what could be permanently reduced stock levels.
Compliance with regulation was the top concern for 32% of respondents.
The survey shows the divergence in opinion between agents and tenants about the scrapping of Section 21 evictions.
It reveals that 38% of tenants believe the reforms will have a “major and positive” impact on the rental sector compared to just 8% of agents who shared this view.
On the other hand 30% of agents believe the end of Section 21 evictions will have a “major and negative” impact.
Similarly, 43% of tenants are very optimistic about the impact of the introduction of lifetime deposits, whereby renters can transfer their deposit from one tenancy to the next, compared to just 17% of agents.
Meanwhile 26% of agents are ambivalent about the change, believing that
lifetime deposits will have neither a positive or negative effect.
The number of lettings agents reporting an increase in arrears has halved since the 2020 survey, dropping from 64% to 32%, with an additional 14% of agents saying arrears have decreased over the past year.
Meanwhile, 48% of respondents reported that arrears had stayed at the same level over the past year.
Almost two-thirds of agents are now offering a rent protection product, with half of those not yet offering one actively considering it.
The majority of agents are positive about the sector, with 67% reporting that they feel “very optimistic” or “somewhat optimistic” about the future of the lettings industry.
This is down from 80% in September 2020, at which point the UK was emerging from all restrictions and the second wave of the pandemic had yet to begin.
The share of agents who feel neither optimistic nor pessimistic about the industry’s future is up from 14% in 2020 to 23%.
Only 1% of agents are “very pessimistic” about the future of the industry.
Tenant finances appear to be recovering as only 6% of the 1,700 tenants surveyed said they remain concerned about the pandemic affecting their ability to pay rent.
This rate has halved compared to the previous survey in September 2020, when 12% of tenants reported concerns about their ability to pay rent.
On the other hand 4% of tenants said they had missed some payments or organised a payment plan in the past year, which is an increase on the September 2020 rate of 2%.
However, the vast majority of tenants – 81% – said that the pandemic had not had any impact on their ability to pay rent in the past year, up on last year’s figure of 75%.
This is despite the fact that, of the tenants surveyed, 24% had been furloughed at some point during the past 12 months.
A large majority of tenants – 75% – now believe their income is secure.
Goodlord chief operating officer Tom Mundy says: “This report paints an encouraging picture for the industry.
“Key signs of recovery can be seen in the arrears data and tenant sentiments, and the majority of agents are still feeling optimistic about the future of the sector.
“Specific concerns around lack of stock and upcoming regulation are well founded, but it appears that agents are becoming increasingly proactive in this regard.
“Sourcing new revenue streams, embracing technology, and streamlining processes are all gathering pace, as agents make their businesses fit for the future.
“After a year like no other, these insights offer a picture of a resilient, forward-thinking industry which is moving with the times and responding to major shifts in tenant demand and landlord behaviour with characteristic stoicism and professionalism.”