Buy-to-let properties in the UK are currently in high demand. The latest data shows that more tenants than ever were looking for accommodation in February.
The private rented sector (PRS) saw a 25% increase in tenants seeking homes in February this year compared to 2019. An average 82 prospective private renters were registered per estate agency branch in the UK, compared to 65 last year. This makes it the most in-demand February on record by ARLA Propertymark.
While this is slightly lower than January’s figure of 88 per branch, it demonstrates a strong need for buy-to-let property in the UK.
The data also showed an increase in the number of buy-to-let properties being managed by estate agents. In February, an average 201 properties were operated per UK estate agent. This is a sharp rise from the 191 recorded in January, although down from 206 in December.
Changing trends in buy-to-let
The rental market in the UK is expanding, and this has been the case for some time. Part of this can be put down to changes in the way people live now compared to 20 years ago. Equally, homeownership aspirations are very different in the current market to what they were a couple of generations ago.
One big factor is affordability. The house price to earnings ratio has increased significantly over the past couple of decades. While back in 1985 you could have bought a property for twice your average annual earnings, now it is more like six times that amount.
A large proportion of people get help from family members to get onto the housing ladder. There are also a number of loans and schemes available to first-time buyers to offer assistance. Still, the average age of renters is getting higher.
Lifestyle choices and changes are another major factor. For many, renting is now preferable to buying. Standards in the private rented sector have vastly improved as more protection is available for both landlords and tenants.
What’s more, renting involves less commitment, more flexibility, the chance to live with friends or alone, and less responsibility. If a boiler breaks or there’s a leak, the landlord is responsible. This can be a huge benefit to busy young professionals as well as renting families.
How might things change?
Thousands of people have taken advantage of schemes such as Help to Buy to get them onto the housing ladder. For many, it is still a chief goal in life. However, as demonstrated by ARLA’s figures, there are growing numbers of people who are looking to rent.
Rental demand varies from area to area. One thing that has a big influence on this is the jobs market. For example, London is seen as the top place in the UK for employment, particularly among graduates and young professionals. As such, rental demand in the capital is high.
However, a growing number of companies have chosen to “north-shore” over recent years. Many big and small firms have moved their offices and even headquarters away from the capital, further north. Birmingham, Manchester, Leeds and Liverpool have been the main beneficiaries of this.
This has led to an exodus of young people away from the capital – and rental demand has followed suit. Along with greater investment and regeneration in these areas making them more desirable places to live, these are the locations to look at for expanding rental markets.
BuyAssociation has a range of investment opportunities available across the UK. Our focus is on emerging and up-and-coming areas. Check out our investments page to see a selection of projects, or sign up for more details.