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Landlords brace themselves for busy end of summer period

The months towards the end of summer are often the busiest for landlords, and 2022 has been no different as tenant demand continues to climb.

Attractive yields combined with strong tenant demand are certainly keeping many buy-to-let landlords keen on the UK rental market, despite the headwinds of rising inflation and interest rates.

According to Fine & Country managing director Nicky Stevenson, there remains a shortage of rental properties on the market compared to the number of tenants seeking homes, meaning landlords are experiencing huge demand when they list their properties at the moment.

Stevenson points out that August and September are “traditionally the busiest times for the rental market”, and she expects that August 2022 “will be no exception” when the rental market figures are revealed.

“In both 2019 and 2021, more new tenancies were started across England and Wales in August than in any other month,” she adds.

Landlords holding steady

One reason for the summer months being the most popular is due to the academic year starting in September. For those in education, as well as families with children in school or university, and households with workers in the education sector, securing a property before term starts is imperative.

Stevenson says: “With strong demand and available properties to let still in short supply, renters are facing increasing pressure to secure properties before the start of the new academic and employment year. The average rent in England and Wales is now £1,081, with the average premium rent £3,452, up 13.6% year-on-year.”

Interest rates are continuing to rise, which is being passed on to landlords with buy-to-let mortgages. While rates still remain historically low, this will affect some investors’ bottom lines and the cost could begin to be passed onto tenants, pushing rents up further.

But the majority of landlords still have confidence in the future of buy-to-let, as Stevenson points out: “A survey of over 1,000 landlords has found 73% are planning to maintain their portfolio with close to 1 in 10 set to expand over the next year.”

Top yields in north west

As rents have risen, so have yields for many landlords. There are myriad reasons for this, including the fact that people now rent for longer than ever before buying, so tenants’ spending power on average is much higher than it once was.

Build-to-rent is also a growing sector which tends to garner larger rents, in return for additional features such as concierges, communal areas and workspaces and outdoor areas, with the focus on creating a community of renters who tend to stay for a longer duration.

Regionally, certain areas have performed particularly well for landlords when it comes to rental yields.

Stevenson explains: “For those in the market, indicative gross yields are attractive and have risen in all regions of England and Wales, including London compared to three years ago.

“Analysis indicates the indicative gross yield exceeds six per cent in six regions, with Yorkshire and the Humber and the north west seeing the most significant improvement in yields compared to three years ago.”

There are many reasons why areas towards the north and Midlands have pulled ahead of the south for landlords.

One major change is that employment prospects in many cities, including Manchester, Liverpool, Birmingham, Sheffield and Leeds, have all improved drastically as a growing number of companies are choosing to base themselves there rather than in London.

This widens the talent pool in these areas, creating prospective tenants for buy-to-let landlords. Meanwhile, infrastructure and transport improvements, as well as major regeneration projects, have all made these areas more attractive places to live and work. Ultimately, this makes them more attractive investment locations for landlords.

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