The rental market in the UK continues to be a competitive and challenging space for renters and landlords alike. According to the latest Rental Index from Rightmove, the national average asking rents outside of London has hit a new record of £1,231 per calendar month, which is over £300 (33%) more than pre-pandemic 2019. While the annual pace of rent growth slows slightly, it remains near double-digits.
In London, average asking rents for new tenants have reached a new record of £2,567 per calendar month. However, homes are still being let at a fast pace, with the average property finding a tenant in just 17 days.
Despite a 3% increase in tenant demand compared to last year, the supply of available properties to rent has increased by 7%, leading to a slightly eased gap between demand and supply. However, landlords face multiple market challenges, including rising taxation and increasing compliance requirements. This has led some landlords to sell up, but most are determined to keep good tenants in their homes.
Low supply of rental properties
The rental market is currently facing a significant challenge due to the low supply of available rental properties. Despite a slight increase in available rental properties compared to last year, the figure is still 42% lower than in 2019, indicating a worrying trend. Meanwhile, the demand for rental properties continues to soar, exceeding last year’s levels by 3% and being 42% higher than in June 2019. This high demand has resulted in renters battling with 20 others in some instances to secure a rental property, leading to a highly competitive and stressful situation for renters.
Landlords are currently facing a range of challenges, including government sentiment, increasing taxation and compliance requirements, and the rising cost of buy-to-let mortgages. This has resulted in some landlords selling up, leading to a further reduction in available rental properties. Landlords are also increasingly concerned about the proposed changes to EPC requirements from the government, with 33% of landlords who own lower EPC-rated properties planning to sell them rather than making improvements to their EPC rating.
Despite these challenges, landlords recognise the importance of having good tenants in their homes and are keen to keep them for longer. The majority of landlords reported that tenants choose to stay in their properties for longer than 24 months, with only 8% saying they stay for a year or less.
Buy-to-Let investment is needed now more than ever
The current state of the rental market, with its high demand and low supply of rental properties, highlights the need for increased Buy-to-Let investment. With more people entering the rental market and struggling to find suitable homes, it is crucial that landlords step in to meet this demand.
Access 2023 UK Buy-to-Let Guide.
Investing in Buy-to-Let properties not only helps to address the shortage of rental properties but also provides landlords with a reliable and potentially lucrative income stream. Despite the challenges faced by landlords, such as rising taxation and compliance requirements, the demand for rental properties remains strong. This presents a unique opportunity for landlords to support renters in finding suitable homes and generate a steady return on their investment.
If you’re considering your next rental property investment, contact Thirlmere Deacon to arrange a 1:1 consultation to discuss your goals.