Rental demand goes up, supply goes down

Rental demand goes up, supply goes down

New research from ARLA Propertymark shows that the demand for rental accommodation in the UK has reached its highest level since September 2017.

This has been measured by looking at the number of prospective tenants registered per letting agent branch which increased to 79 in July 2018 from the previous level of 71. This represents an increase of 13% year-on-year compared to July 2017 which saw just 70 tenants registered per branch.

At the same time as demand is going up the ARLA research shows that the available supply is dwindling. The average number of rental properties managed by member branches fell from 191 in June to 184 in July, making it harder than ever for tenants to find a new home.

These two changes are reflected in average rents, with more than 30% of tenants experiencing rent rises in July 2018 as the rising competition for homes pushed prices higher.

David Cox, chief executive of ARLA Propertymark, blames the rent rises on landlords leaving the market. ‘Last month, an average of four landlords took their properties off the market per branch, up from three this time last year – and as supply falls, competition among tenants increases, which pushes up rent costs.

‘Almost a third saw their rents rise last month, and although this figure was down from June, it’s still far too high. To put tenants back in the driving seat, we need more homes available to rent, and the only way this will be achieved is if the Government makes the market more attractive for BTL investors.’

If that is the case then this is perhaps a good time for landlords to expand their portfolios or enter the market for the first time. If casual landlords are exiting the market then there are likely to be deals available for more serious investors. In addition, the rent rises and growing competition for the best rental accommodation mean that you are likely to be able to charge a good rent straight away and the risk of void periods is reduced.

The latest RICS UK residential market survey agrees with this assessment, suggesting that supply issues could cause rents to increase by an average of 15% across the country by the middle of 2023. The report notes that the supply of available homes is falling almost everywhere in the country to some extent, meaning that buy to let property investors who are planning for the medium- and long-term are likely to benefit.

If you are interested in expanding your portfolio have a look at our available buy to let investment opportunities today.

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