Tenant demand continues to be stronger than ever

Tenant demand continues to be stronger than ever

We are currently living in extraordinary times where the COVID-19 crisis is causing a lot of uncertainty in the market. However, if recent data is anything to go by, landlords should continue to feel positive.

The latest residential market survey by the Royal Institute of Chartered Surveyors (RICS) has revealed that UK rents continued to see an upward pressure in February, thanks to ongoing demand from tenants. In their report, RICS found that tenant demand continued to grow for the third month running. However, the number of properties being listed in the private rental market remained at a record low with instructions from landlords falling once again – an ongoing trend since it was initially recorded in 2016.

This growing demand from tenants is putting an upward pressure on rents across the country. According to data recorded in HomeLet’s rental index, it was revealed that UK rents had increased by 1.6% since the previous year and that nine out of the 12 regions monitored saw an increase in average rents since January. Additionally, the report by RICS predicted that this trend of rising tenant demand and falling supply could potentially see rents increase by as much as 3% on a year-on-year basis over the next five years.

There was a lot of activity in the residential sales market throughout February and in a similar vein to the lettings market, demand was also high amongst buyers which in turn, put upward pressure on house prices. Out of all the respondents to the RICS survey, 29% said that they saw an increase in prices of the properties being listed – an 11% increase from the previous month. The number of homes coming on to the market also saw an increase for the third month in a row in February – with the number of instructions increasing by 15%. The report recorded a positive outlook in the property market for the rest of the year – around 61% of respondents believed that sales in the residential market will continue to be strong throughout the rest of the year. However, this data was recorded before the COVID-19 crisis had reached the critical stage that it’s at now. Since the data was recorded, the country has gone into lockdown and homebuyers have been advised to put their property transactions on hold.

Simon Rubinsohn, RICS Chief Economist, commented: ‘It is encouraging that the results of the latest survey continue to show a positive trend both in terms of potential buyer interest and new instructions to agents. Indeed, this is the first time since 2014 that new supply to the market on the RICS indicator has increased for three consecutive months.

‘Inventory levels are still at historically low levels despite this but the firmer trend in appraisals suggests that the picture could improve over the coming months providing the coronavirus doesn’t become more of an inhibitor of activity in the sector.

‘For now at least, feedback around expectations are consistent with activity levels continuing to strengthen albeit relatively modestly.’

It’s encouraging to see that the market is continuing to look positive despite everything that’s happening at the moment and it will be interesting to see how the market will hold up throughout the COVID-19 crisis. Despite this, there is still a lot of demand in the residential market and this will continue to be incredibly fruitful for landlords.

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