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Landlords becoming even more crucial in UK housing market

As homeownership continues to be out of reach for many, the role of landlords and the private rented sector will become even more important. 

One of the main factors holding back sales across the UK housing market at present is lack of stock, according to the latest Residential Market Survey by the Royal Institute for Chartered Surveyors (Rics). As the demand and supply imbalance continues to support house price growth, rental accommodation is a vital alternative for thousands of households.

The survey, which covers the state of the market up to December 2021, showed that a net balance of +9% respondents noted an increase in new buyers. This continues to outstrip the number of new instructions from sellers, which either fell or remained stagnant across the UK.

Over the coming 12 months, a net balance of +67% of respondents expect house prices to remain elevated. This will coincide with an anticipated increase in sales activity over the next three months.

Landlords will see surge in tenant demand

Respondents in the survey are reporting solid growth in demand among the country’s rental market tenants. The number of landlords instructing agents, however, seems to be dwindling, which means there is more competition for each rental home.

More than a quarter (27%) of those surveyed said landlord instructions had declined, and the majority are expecting rental price growth to increase further as a result. Landlords with the most in-demand properties may certainly see tenants will to pay higher prices to secure them.

Emma Cox, sales director at Shawbrook Bank, agrees that the accommodation offered by landlords is now hugely important in the housing sector.

“With a lack of quality supply still driving competition between prospective buyers, the landscape remains overwhelmingly in favour of sellers,” she says. “This has – and will continue to – prove challenging for first-time buyers. With homeownership becoming an increasingly difficult aspiration, the role of landlords within the private rented sector is something the market cannot overlook.”

Is there still a north-south divide?

The Rics survey shows that by far the strongest demand over the past three months among tenants has been in the north of England. On a more specific level, the north-west leads the way for the number of respondents noting a rise in tenants seeking homes on their books.

This is followed by London, where the rental market is still a major facet for thousands who would otherwise be unable to afford to live there. Scotland, Wales and the East Midlands are also experiencing particularly high numbers of new tenants, so landlords in these areas may be noticing more interest in their properties.

In terms of landlords, new instructions have been tailing off in certain areas, including the West Midlands and the East Midlands. However, areas in these regions have also been earmarked as property investment hotspots thanks to tenant demand coupled with strong house price rises and future regeneration and investment plans. This is being led by places like Birmingham and Nottingham in particular.

Commenting on the West Midlands lettings market, Colin Townsend of the Malvern branch of John Goodwin estate agents says: “With many landlords deciding that 2021 was a year for selling many of their portfolios, the shortage of rental stock has become even more serious. We expect rents to rise significantly throughout 2022.”

In a similar vein, Richard Franklin of Franklin Gallimore adds: “Many landlords who have kept rents unreviewed for several years are likely to seek reviews in 2022 to counteract general inflation.”

BuyAssociation has a range of property investment opportunities available across the UK, including some of the hotspot locations in the north and Midlands. Browse a selection of our opportunities here, or get in touch for more details.

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