Rental market sees surge in demand as academic year begins

Rental market sees surge in demand as academic year begins

0:01 AM, 13th September 2023, About 7 months ago

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As the new academic year kicks off, the UK’s rental market is witnessing a seasonal peak characterised by a substantial increase in demand, minimal void periods and a surge in renters looking to renew their tenancies, one property expert highlights.

Recent data from HomeLet reveals that the average monthly rent reached £1,261 last month, marking a significant year-on-year increase of 10.3%.

Nicky Stevenson, the managing director of real estate firm Fine & Country, attributes this rent price surge to the traditional rise in student demand and other economic factors impacting the market.

While there has been a slight increase in void periods, rising from nine days in July to 13 days in August according to Goodlord’s data, it’s essential to note that August still marked the second-lowest month for voids since July 2022, as Ms Stevenson points out.

Growing disparity between supply and demand

Ms Stevenson also highlights a growing disparity between supply and demand in the rental market and points to July when the number of prospective new tenants surged by 38% compared to the same period the previous year.

However, the supply of rental properties per branch only increased by 24% which led to more than three-quarters of agents reporting an increase in renters seeking contract renewals, while only 5% reported a decrease, according to Dataloft.

Examining trends in the rental market, Ms Stevenson notes that many landlords have been reducing their portfolios. CBRE data indicates that since 2016, approximately 400,000 rental homes have been sold by landlords, with 126,500 of these sales occurring since the beginning of 2022. Policy changes, increasing taxation, rising inflation, and mounting mortgage costs have diminished the financial viability of buy-to-let properties, leading many landlords to consider exiting the market.

400,000 rental homes have been sold by landlords’

She said: “According to CBRE data, since 2016, approximately 400,000 rental homes have been sold by landlords, with 126,500 of these sales occurring since the beginning of 2022.

“The reasons behind this shift include policy changes, increasing taxation, rising inflation, and mounting mortgage costs, all of which have reduced the financial viability of buy-to-let properties.”

Ms Stevenson added: “Many landlords are looking to exit the market.

“However, for those considering a medium-to-long-term investment strategy, the current market conditions offer optimism.”

‘Continue to provide attractive returns and capital growth’

Ms Stevenson continued: “Softening sales prices and a downward trend in mortgage rates, coupled with steadily rising rents, continue to provide attractive returns and capital growth prospects for investors.”

She says that Money.co.uk reports that an estimated 41% of landlords own all of their properties outright, while 35% hold all their properties on a mortgage.

Ms Stevenson added: “Those without a mortgage or with lower loan-to-values are in a particularly strong position to capitalise on the current market dynamics.”

She also warns that this month will see the lettings market experiencing heightened demand, low void periods and a growing interest in tenancy renewals.

Ms Stevenson said: “While landlords have faced challenges in recent years, the potential for medium-to-long-term investment remains robust.”


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