Following a rigorous year for the global economy, we delve into the performance of the private rental sector and anticipate future developments for buy-to-let stakeholders.
Market Analysis
Our data-driven approach elucidates the current state of the private rental sector.
Demand Metrics
The fervor for rental properties is evident. Observations indicate a 3% increase from 2022 and an impressive 42% rise since 2019. This surge can be attributed to challenges faced by first-time home buyers, accentuated by elevated interest rates, coupled with a deficit in dedicated student accommodations.
Supply Dynamics
The perennial mismatch between housing supply and demand persists with marginal signs of rectification. A considerable number of developers have been reticent to embark on new constructions due to escalating material costs and economic volatilities.
Contrary to last year’s prognostications, which foresaw a large exodus of landlords from the market, such transitions remain muted. While some divested, a predominant section adopts a strategic, long-term outlook, retaining their assets. Significantly, between 30% to 50% of the properties sold over the preceding year were acquired by fellow landlords, ensuring their presence in the rental pool.
Rental Pricing Landscape
The ramifications of augmented interest rates on rental inflation are unambiguous. Industry experts project an 8% surge by year-end, though present figures marginally exceed this.
Tenant Considerations
Amidst heightened living costs, tenants prioritize:
- Energy expenditures (80%)
- Rental costs (57%)
- Geographical desirability (58%)
- Lease duration (57%)
- Bedroom count (50%)
- Proximity to public transit (42%)
- Pet-friendly accommodations (41%)
- Availability of external spaces (35%)
Inferences for Landlords
Drawing from the data, several implications emerge for stakeholders:
- As tenants become increasingly cognizant of energy expenses, amenities like double-glazing or solar installations may garner preference.
- Recurring tenant preferences, such as transport accessibility and outdoor spaces, warrant continued attention.
- For landlords orienting towards extended leases, the inclusion of pet permissions, deemed vital by 41% of tenants, could be a decisive factor.
If you’d like to learn about our property management services, contact our lettings team today.
1 Rightmove
2 Hamptons
3 Zoopla
4 UK Renters’ Report 2023, Finbri
