UK rents have risen by 6.7% since last year, as buy-to-let landlords continue to be flooded with enquiries from tenants seeking homes.
Despite a slight fall in the number of tenants registering at Propertymark member branches in June, demand in the sector continues to significantly outweigh the supply of available rental properties, according to the latest Housing Insight report from the industry body.
This continues to support the rise of UK rents, with the most recent data from the Office for National Statistics (ONS) revealing a 6.7% hike in UK rents over the past 12 months, and a 0.3% month-on-month rise.
In England, average rents are now £1,399, with Nathan Emerson, CEO of Propertymark, pointing out that the consistency of the market in terms of the supply and demand gap is likely to mean very little fluctuation in the short to medium-term outlook for the rental sector.
He also points to a lack of support for landlords which could continue to put upwards pressure on UK rents across many regions, and particularly in towns and cities that are becoming more appealing places for tenants to live due to regeneration.
UK rents supported by demand
Propertymark’s report reveals a dip in the number of new tenants registering in June, with an average of 57 tenants enrolling in the month of June – down from almost 100 this time last year.
However, this was coupled with a slight fall in the number of rental homes available, which fell to an average of just 9.75 homes per member branch. This means there are more than six potential tenant per home, creating strong competition and pushing up UK rents.
The figures also point towards an increase in the number of tenants staying put for longer, which likely reflects both the lack of housing options as well as the rise of UK rents making it more cost-efficient to stay in an existing property rather than move.
The number of new tenancies per member branch decreased slightly between May and June, down to 10.23.
However, while overall UK rents increased over the past year and month according to the ONS, members of Propertymark reported mixed results in June. Just over half (56%) of letting agents reported that rents remained static, with 13% seeing an overall fall, and 31% stating they felt rents had increased in their area.
Positive outlook for landlords
Buy-to-let landlords who own properties in areas of high demand are not only seeing strong appetite for their homes listed for rent amid rising UK rents.
Propertymark’s research also found that void periods – where a rental home sits empty between tenancies – have shortened slightly to three weeks on average, which again represents the level of demand.
The report notes: “The length of void periods is a good indicator of how dynamic the market is.”
At the same time, rental arrears have remained steady with just 2.8% of members reporting tenants who had fallen behind on their rental payments. This is a good reflection of the state of consumer finances, which is an important consideration as UK rents continue to climb.
Housing market needs “healthy mix of tenures”
Still, affordability for tenants remains stretched in many places, and the rise of UK rents could put further pressure on people’s pockets.
Phil Spencer, founder of Move iQ, said: “Seeing another dip in the number of privately rented homes available will likely not boost renters’ confidence. Wages have generally failed to keep pace with rent increases over the years in many regions, with the issues further worsened by a slowdown in property investment within the sector.
“It would help enormously if we could all see the promotion of a healthy mix of tenures, and appreciate the important role that good, law-abiding landlords play in housing the nation. We now need to nurture and incentivise current and future investment to avoid further fuelling this ever-increasing gap in available homes to rent and the resulting growing demand from renters.”
