Demand for Rental Property Continues to Soar in 2024

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Tenant Demand to Stay on the Up Looking at Future Projections

Last year’s private rental market was characterised by a supply-demand imbalance in available rental properties. The latest data from research commissioned by the National Residential Landlords Association (NRLA) shows that this soaring demand continued into the final quarter of 2023 and looks set to rise even higher, looking at projections for the next decade.

In data compiled by research consultancy BVA-BDRC, in Q4 2023, 63% of landlords reported increased tenant demand.

The research suggests that demand is substantially higher than pre-pandemic levels. For example, in Q4 2019, 25% of landlords reported increased demand.

The NRLA believes that there are some steps the government can take to encourage more buy-to-let property investments in the UK market and help alleviate this supply-demand imbalance.

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Why is Tenant Demand Set to Soar Even Higher?

In its Budget submission to the Treasury, the NRLA highlights several future projections that they believe will significantly affect the demand for private rental homes, exacerbating the supply-demand imbalance further.

Firstly, UCAS believes that by 2030, the number of higher education applicants could rise to over 1 million in one year. This is almost a third higher than the figures for 2022. There is already a shortage of student accommodation in some cities, which could become a more significant issue in the future.

According to ONS, another factor is that the number of people aged between 15 and 29 is projected to increase by over 6% over the next ten years. Young people are more likely to rent, which may also strain the undersupply of properties.

According to the Office for Budget Responsibility, net migration flows will likely settle at 245,000 annually by 2026/27. Migrants are three times more likely to live in private rented accommodation than the UK-born population.

Lastly, the NRLA pointed out that more people turn to the private rental sector for somewhere to live, preceding homeownership due to higher costs and mortgage rates.

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How to Address the Supply-Demand Imbalance?

This massive demand has led to many incentives for landlords to purchase more property or for first-time investors to get involved in the buy-to-let market. The continuing supply-demand imbalance has led to landlords being inundated with viewing requests as soon as a property hits the market, meaning there will likely be fewer void periods. This undersupply of available properties has also exerted upward pressure on rents, resulting in rapid rental growth and a high monthly income for property investors.

According to Ben Beadle, the Chief Executive of the National Residential Landlords Association:

“The country needs more of every type of housing, and that has to include new homes for private rent. The quicker the government takes this into account, the sooner we can relieve the struggles renters face when finding a place to call home.”

The NRLA also detailed the changes they believe the government can make to bring more available rental properties into the market and address the imbalance.

In their submission, the NRLA called on the Chancellor to scrap tax hikes and end the 3% stamp duty levy on buying buy-to-let property. They forecast that this would bring almost 900,000 new private rental homes into the market in the next decade, leading to a £10 billion boost to Treasury revenue through increased income and corporation tax receipts.

Learn More: Looking for the best buy-to-let properties? Take a look at some of our latest area guides covering topics such as buy-to-let property in Telford and Middlesbrough investment properties.

Author

Jessica Ferris

Jessica is a property content writer at RWinvest. Keeping a close eye on the UK property market, Jessica helps our readers stay informed and up to date on the latest market news and statistics.