Market Focus: Rental demand has hit a five year high
Recent research from the National Residential Landlords Association (NRLA) indicates that rental demand from tenants across England and Wales is the highest it’s been for five years.
The survey of private landlords – conducted in partnership with research consultancy BVA/BDRC – found that 39% of confirmed demand for rented properties had increased by 8% in quarter two 2021 in comparison to quarter one 2021.
The survey of 753 members of the NRLA shows demand now matches a peak from the first quarter of 2016.
As a result of the increase in demand, the UK average rent has broken the £1000 a month barrier for the first time. It’s unsurprising therefore that the number of tenants experiencing rental increases has risen to 68%. This figure is five times higher than in previous years.
The impact of COVID-19 on landlords
The survey suggests this increase in rental demand can be attributed to renewed confidence from prospective tenants as the pandemic restrictions begin to ease.
COVID-19 had an adverse effect on many residential landlords, with many tenants at the beginning of the pandemic requesting rent deferrals or payment holidays.
The rise in tenant demand however is reflective of a continuing trend, as demand has risen year on year since 2016.
Despite the low levels of demand in quarter two of 2020, the height of the pandemic, demand for rented homes has bounced back quickly.
Key findings from the report
● Rental demand as a whole has increased by 60%, but 53% of London landlords reported a fall in demand
● 14% of landlords intend to purchase additional property
● 68% of tenants reported a rent increase
● The average length of a tenancy has risen to 21 months
Rising house prices
The first six months of 2021 saw property prices increase by 5.6%. This increase can be attributed, in part, due to the demand for housing outweighing the supply of property and buyers looking to take advantage of the stamp duty savings.
The rise in house prices shows no signs of slowing down. Despite the Stamp Duty savings coming to an end on 30th September, the number of house sales remains consistently high.
The Stamp Duty holiday provided a great opportunity for investors and landlords. While some renters used the savings as an incentive to step onto the property ladder, many remained anchored to the rental market due to the increase in property prices.
Changing buyer trends
As well as impacting price rises, buyer – and subsequently renter – trends have changed. Offices are beginning to reopen, and rental demand should continue to rise in city centres.
The pandemic also saw many students staying away from university and learning to switch to virtual lectures and online study.
As restrictions continue to ease, data from The Universities and Colleges Admissions Service (UCAS) shows the number of university applications starting in September is at record levels, and up 10% from 2020 figures.
Furthermore, due to travel restrictions easing, international student applications are 12% higher than last year.
As universities begin to open for face-to-face teaching once more, the requirement to live near campus will rise. This is a good sign for investors, as renter demand will soar in city centres following a reduction in student lettings in 2020.
Is UK property still a good investment for landlords?
Investing in the UK property market is a great way to generate wealth and preserve income.
Reasons to invest in the UK property market
1) Interest rates remain at a record low
2) Property prices are expected to rise 21% in the five years to 2025
3) Rental growth of 16.5% forecast to 2025
Why invest in Manchester?
Manchester is one of the UK’s fastest-growing cities, and quarter one 2021 saw a 34% rise in the number of properties being let out compared to the same period in 2019.
The city continues to drive strong returns for investors and high rental yields. Manchester is performing higher than the rest of the country when it comes to rental yields, with an average of 5.37%.
More affordable property prices, consistent demand from tenants and a growing economy make Manchester an attractive option for portfolio investors and landlords alike.
Why choose homes4u?
We have been working with landlords for over 30 years to offer award-winning services at an affordable price.
Whether you are looking for a team to manage your existing properties, or help to grow your portfolio, get in touch with us today.