The length of time that UK rental properties are listed before being snapped up has shortened due to heightened demand, with a gap to be filled by property investors.
Two major industry bodies – the National Residential Landlords Association (NRLA) and Savills – are calling for greater investment into the private rented sector, as well as strategies to instil more confidence for landlords, in order to boost the country’s rental supply.
Without this, they believe there is a danger that the extremely high rates of competition between tenants we have seen in recent months will continue, creating more pressure for renters and pushing up rental prices at a faster pace than is affordable for many.
Around 4.4 million households currently rely on the private rented sector for accommodation, and people are continuing to buy later in life than they did 20 years ago – or even eschew homeownership altogether. This creates an ideal landscape for property investors to buy and let out properties in some of the country’s key locations.
However, industry bodies believe even more investment is needed, and attitudes towards the private rented sector within the government also need to change. To encourage investment, many in the industry have called for tax changes to incentivise landlord buyers in order to provide much-needed rental homes.
Fast turnover in rental homes
The latest figures from Zoopla show that two-bedroom rental homes listed on the property portal are only listed for an average of 25 days before being snapped up by tenants. This is 10 days less than the pre-pandemic average, according to Zoopla, demonstrating the intense competition among tenants.
This is the case across every region of the UK, according to the data, with rental homes in the North West and Scotland having the shortest average listing time. The North West has been recognised as having some of the most promising credentials for property investors in recent years, with resilient house prices and a strong rental market.
One agent in Liverpool who spoke to the BBC, Darren Kay, director at TVG Lettings, said: “We can list a property one day, it can have 500 views that day online, we could have 50 enquiries online, following that there are viewings and it is gone within seven days.”
Others have described the situation as “unprecedented”; but encouraging more property investors to enter the sector, or add to their portfolios, would help to ease this competition for tenants, shrinking the gap between demand and supply.
Call for more property investors
The UK housing market still remains a popular and lucrative space for property investors and buy-to-let landlords due to ongoing high tenant demand, with rental yields increasing over the past year. This is very much location-based, too, with the north of England generally reaping better returns than the south.
The latest Savills house price forecast predicts that UK house prices will increase, on average, by 21.6% in total over the next five years – which, taken alone, is a better return than investors might expect to get on other assets in the time frame. Of course, there are other costs, risks and considerations to take into account, as with any investment.
In the north west, that rises to 28.2% over the next five years – the highest house price rise in the country – and this is why many property investors are now focusing their search on the likes of Manchester, Liverpool, and the surrounding areas.
These areas also have extremely strong rental markets, but with the same imbalance between demand and supply, so there is plenty of space for property investors to enter the market.
Richard Valentine-Selsey, director of residential research at Savills, said: “There is not enough supply coming on to the market, and we need more investment in the sector to bring more homes available to rent,” he said.
Ben Beadle, chief executive of the NRLA, pointed out: “Landlords selling up is the single biggest challenge renters face. The only answer is to ensure responsible landlords have the confidence to stay in the market and sustain tenancies.”
If you’re looking for your next UK property investment in one of the country’s best-performing locations, get in touch with BuyAssociation today. You can read more UK property news here.
