The UK rental market continues to see high levels of demand from tenants, even with an increase in stock levels, meaning landlords are seeing strong competition for their homes.
The latest figures released in Propertymark’s Housing Insight Report for April show that homes in the private rented sector remain extremely sought after among tenants, who are often staying put in their properties and in the sector for longer.
For buy-to-let landlords in many areas, their properties are being snapped up especially quickly by tenants, and those tenants are also choosing to re-sign their tenancy agreements rather than move on because of the sheer competition within the market, as well as rising rental prices.
According to Propertymark, registrations at member branches from prospective tenants increased to 90 in April, compared with 82 in March, which is a 16% rise. Compared with a year ago (April 2023), tenant demand is lower, as there were around 118 tenants listed per member branch then.
However, while this shows a more stable and less strained market, the number of rental homes available remains short of the level of tenant interest, with an average of nine new prospective tenants registered for each rental property listed on the market.
Tenants still experience competition
On the positive side for renters, the research shows that in April 2024, stock levels also increased slightly from around nine rental properties listed per member branch in March to an average of 10 per branch in April. This level remains within “long-run parameters”, says the report.
Back in April 2023, there were around 14 new prospective renters registering per the number of properties available, so competition has definitely eased since this time last year. But for landlords, this still shows an extremely healthy level of demand, which will also be dependent on the location of the buy-to-let property.
The report also shows that the average number of new tenancies agreed remained static for the month of April, at around seven per member branch. At the same time, the market is seeing rental prices fluctuate by market and region, although 41% of members reported that rents had increased, while 47% said they had remained steady.
Arrears and void periods
Rental arrears and void periods are two crucial aspects of the market that property investors and landlords should be aware of, as these factors can make a big difference when it comes to overall returns.
Agents in many parts of the country have noticed an improvement in rental arrears, according to April’s figures, as Propertymark’s members reported that only around 2% of fully managed and rent collect/rent management properties were in arrears. This has been falling since it peaked slightly in December at around 4.5%.
Meanwhile, the average void period reduced moderately in April, says Propertymark, although it remains “within long-run parameters”. Still, this is good news for many landlords, who want to keep their void periods as low as possible and ensure each property is tenanted for the majority of the year.
Improved economic outlook
The economic and financial backdrop to the property market has seen some improvement over the past month, with an estimated GDP growth of 0.4% in March, while inflation [the Consumer Price Index] decreased from 3.2% in March to 2.3% in April, as it inches closer to the country’s 2% target.
As such, the hope among the wider market is that this will lead to the Bank of England finally bringing down the base rate from 5.25%, where it has remained since last summer. This should have the knock-on effect of not only improving consumer confidence, but of mortgage rates being reduced by lenders to spur on the property market.
Commenting on the latest rental market figures, Propertymark CEO Nathan Emerson said: “In the residential lettings sector, our members report an increase in the number of prospective tenant registrations.
“However, while stock levels have increased slightly, demand continues to outstrip supply, with around 9 new applicants registered for each available property in April 2024. Rents continue to fluctuate although there are signs that in some areas, rents have reached a ceiling in terms of affordability.
“More broadly, our members remain concerned that some landlords are choosing to exit the sector. The reasons for exit are multifaceted although ongoing legislative uncertainty is undoubtedly playing a role.
“We continue to work with policymakers across the UK to highlight the critical role the PRS plays in the wider housing system and to encourage policies that can stabilise the sector’s investment patterns.”
