Buy-to-let landlords across the UK are continuing to be flooded with interest for their rental property listings, with the average home sitting empty for just 14 days between tenancies.
Investing in a rental property in an area of high demand has always been a key strategy for successful landlords, with locations close to universities, good transport links, amenities and employment opportunities being particularly sought after.
While this is still certainly the case, and location continues to play a major role in any investment prospect, the sheer level of tenant demand in the market right now compared with the amount of stock available means that the vast majority of properties are being snapped up quickly by tenants.
This has also served to push up costs for tenants, with the average rental property now bringing in an additional almost 8% in terms of rental value compared to a year ago, according to the latest data provided by Goodlord’s Rental Index for September.
From a property investment perspective, while mortgage rates across the board are up compared with a couple of years ago, and price rises have begun to soften, the exceptionally high demand for rental property in many parts of the UK is giving landlords the confidence to invest.
Rent rises led by London and the north west
Month-on-month, the cost of a rental property for tenants has stayed largely the same across England as a whole, with the Goodlord index showing an overall marginal dip of -0.08%. However, the picture was very different in Greater London, where rents soared by 6.08% between August and September.
The average rent on a new tenancy in Greater London is now £2,275, which is considerably higher than elsewhere in the country. For those unable to afford the latest hikes, it seems likely we could see another tenant exodus where renters seek homes in more affordable areas.
On an annual basis, the average cost of rental property in Greater London has climbed by 10.73%, more than anywhere else in the UK. The next strongest rental rises were seen in the north west, where rents have increased by 8.77% from £989 per month last September to £1,076 this September.
While the growth in the north west was strong, led by an increasing tenant demand in the region, rental costs remain less than half of that seen in London; yet landlords’ yields are considerably higher in the north west, on average, due to the more affordable property prices there.
The West Midlands has seen the third strongest rental growth annually with an 8.38% increase – above the average for England as a whole of 7.72%.
Tenants outnumber rental property available
The latest research from Propertymark clearly demonstrates the distinct lack of available rental property compared with the number of prospective tenants seeking homes. Its latest report shows that there are an average of 197 tenants registered per member branch, compared with just 11 properties available to rent.
This has exacerbated the rising cost of renting, but has also led to a period of historically short void periods for landlords – which is the period of time a rental property sits empty between tenancies.
Sometimes, a void period is unavoidable, such as if the landlord needs to carry out renovations or repair work, or even simple redecoration after tenants move out before the home can become available to new tenants. If none of this needs to be done, though, the goal is to let the property out as quickly as possible.
According to Goodlord, the average rental property in England is currently empty for 14 days between tenancies, as of September’s figures. This is up only slightly from 13 in August, and generates an overall picture of a busy period for the rental market.
William Reeve, CEO of Goodlord, said: “Whilst this September didn’t bring the nationwide bump in rental prices we saw last year, records were smashed across London and the South East – with rental costs there now significantly higher than their 2022 and early 2023 levels.
“The onset of autumn typically brings a period of stability when it comes to prices, but with pressures on the market more intense than ever, we doubt September represents an end to the cycle of price setting which we’ve seen over recent months.”