In 2020 and 2021 we saw tenants leaving city centres and heading for more rural areas with additional space and gardens.
Now that life is returning to its pre-covid ways we have seen rental prices hit a 13 year high with average rents at £1,000 pcm - an annual increase of 8.3%. Usually demand for this time of year is the lowest throughout the year but this New Year has seen heightened demand for rental properties, up 76% compared to January-February between 2018-2021.
Now demand may be on the up but supply is currently 39% below where they usually are at the beginning of the year. Property mogul Zoopla suggests that the shrinking stock of rental properties is due to a continued decrease in buy to let investment over the last five years.
The data would suggest that with rents increasing, tenants will be more likely to stay in their current home, which would lead to less void periods for landlords. However, do be mindful that you’re not pricing yourself out of the market trying to keep up with the increasing rents.
With that being said, the lack of supply will show more modest growth in rental values particularly in city centres, but the lack of demand, along with the increase in household costs, will reduce pressure on the supply.
There’s nothing to say that rental prices could continue to rise, but this will leave some tenants on lower paid incomes stretched for affordability. At the moment it takes just 14 days to let out a property, so the market is certainly moving fast.
Landlords will also want to be aware of the impending increases to buy to let mortgage rates. With two base rate increases in such a short period of time, it’s inevitable that there will be more, particularly with the spike in inflation and rising energy costs. So whether you’re on a standard variable rate or a tracker type product it’s definitely worth reviewing your mortgage rates.
At this moment in time it’s difficult to say which way for definite the lettings market is going to go given the number of factors to consider, but it’s expected that the rental price growth will slow down throughout 2022 with a predicted 4.5% increase outside of London and 3.5% in London.
If you’re looking for a reputable letting agent then click here to request a free valuation on your property and a member of our team will be in touch. Or, if you’d like assistance with your mortgage rate, schedule a callback and we’ll be happy to help.