Trends in the UK rental market show that it’s a great time for investors. Rental prices are increasing along with property values, and there is rapid growth in the build-to-rent sector. In addition, it seems that more people than ever are looking to rent a home rather than buy. As the country emerges from the COVID-19 pandemic the rental market appears to be holding steady.
What do the current trends in the rental market mean for investors? How does the rental housing market in London compare to the rest of the UK? This article examines the five trends affecting the rental property market.
Rent Prices Are Increasing
One of the significant trends in the rental market is the rise in rents. Average rent prices in London are increasing at their highest rate for over ten years. According to Zoopla, renters are paying an average of £456 more per year than 12 months ago.
The Evening Standard reported that the most significant rent increases were in inner London, with an increase of 16.2 per cent and average monthly rents in the capital toping £1,473.
As expected, London tops the list of the areas in the UK with the highest rents. Rental prices for flats and houses in London are now back to pre-pandemic levels. And rents in popular commuter areas of London like Rotherhithe, Greenwich, and Southwark have seen a 10 per cent rise in rents.
Rental Demand Is High in 2022
Increased demand to rent properties and a lack of supply mean the rental market in 2022 is hot in London. Some analysts say that demand is at its highest since 2016. On average, voids in rental properties are typically filled within 15 days of being listed. Some estimates put the drop in available rental housing stock at around 44 per cent on the previous year.
For example, most letting agents in London have seen enquiries from prospective tenants are up 20 per cent on the same period as last year. However, there are far fewer properties to choose from. And since the end of the pandemic, the highest competition has been for flats as commuters return to living in affordable areas of London.
This is a positive trend for landlords because it gives them the upper hand when setting rent prices.
Build-to-Rent Sector Is Increasing
The build-to-rent sector continues to increase to meet the demand for rented accommodation. According to figures, 2021 saw a 15 per cent increase in build-to-rent properties. And it’s predicted that the sector could increase threefold by the end of 2022. Due to the huge supply gap, build-to-rent presents excellent opportunities for developers and investors throughout the country.
Due to the demand to rent a flat or apartment, buy-to-let investments continue to perform well in London. The areas where investors can expect the greatest yields are in South East London. The top neighbourhoods are SE17, SE11, and SE22.
Tenants Are Not on the Move
A positive trend in the rental market throughout England is that tenants are staying put. The English Housing Survey revealed that the average renter in England stays in one place for five years. The most common reasons for moving are job-related, moving to a better neighbourhood and needing a bigger place.
Sixty-one per cent of renters say they would like to buy a house in the future. However, due to the rise in house prices and the cost-of-living crisis, many would-be homebuyers are forced to stay in rental accommodation for the foreseeable future.
Renters in the UK Want More Space
The pandemic changed the way many people live and work. Although life is almost back to normal in 2022, London property investors should be aware of changes in people’s housing needs when it comes to space and access to amenities. And tenants are prepared to pay a premium to get the type of rental property that suits their lifestyle.
The three most important things renters are looking for are an extra room to use as a home office, outside space in the form of a large garden or proximity to green areas, and super-fast broadband.
According to analysts, proximity to a tube or train station is a top priority for most renters in London. The areas with the most substantial gains are Canary Wharf, Shoreditch and Clerkenwell, with around a 20 per cent increase in demand.
Do you have a property to let in South London? If so, please get in touch with Hastings International today. Our team of experts is ready to give you the best advice on rental property management and help you fill voids as fast as possible.
