Market Instability Leading to Increased Rental Demand
Amid the current economic climate, the demand for rental properties has seen a significant upsurge, the latest studies show.
A recent Landlord Report has seen 62.24% of buy-to-let landlords state they have experienced increased demand for their rental properties over the last 12 months.
The research from specialist finance broker Finbri outlines how the “continued instability of mortgages and the UK economy has led to rising demand for rental property. Due to prolonged uncertainty, first-time buyers are postponing entry into the market.”
According to a survey undertaken by specialist buy-to-let lender Paragon Bank, landlords in Central London report even higher figures – an astonishing 94% of landlords reporting increased demand.
In turn, rooms in HMOs (housing in multiple occupations) have seen their rents reach record heights as tenant demand far outweighs supply. SpareRoom outlined how tenant demand hit a nine-year high last August, corresponding to the broader rental market witnessing a 23% year-on-year growth in demand for rental properties.
This heightened demand shows no sign of slowing down anytime soon as tenants withhold trying to get onto the property ladder. Three-quarters of tenants in Finbri’s survey believe they will not own property in 2023 – meaning renting is more likely.
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Supply-Demand Imbalance
A shortage in the UK’s rental stock has led to landlords struggling to meet demand – which has been exacerbated by the cost-of-living crisis.
The rapid rise in tenant demand can be attributed to such a shortfall – with a 53% increase in tenant enquiries compared to pre-pandemic levels. Rental prices are forecast to rise by over 5% across the coming year if such imbalance continues.
A survey of 1,000 UK renters has identified an array of barriers into renting a property – these have included:
- 45% of existing tenants being subject to rental price increases
- 06% experiencing high deposits
- 86% highlighted a lack of properties on offer in their preferred location
- 08% reported increased competition over the asking price
- 49% were unsuccessful in securing a viewing
Such figures highlight the soaring demand for rental properties that landlords should stay aware of as it becomes increasingly essential that they provide much-needed accommodation to cater to this demand.
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Are Landlords Staying in the Market?
Ultimately, the high demand for properties means that landlords should feel an incentive to continue investing in the property market. Out of those surveyed this rings true – nearly half of landlords surveyed in the Landlord Report have stated that they believe it is a good time to invest in the UK property market.
On top of this, 45% of landlords answered that they plan on investing in more property in 2023.
Whilst it has been suggested that house prices may fall by a minimum of 5% over the coming year, there is potential for further investment opportunities due to the increase in demand for rental properties. This means 2023 is a good time for investors to diversify their property portfolio and accumulate further gains.
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The sharp rise in tenant demand means that 2024 could serve as the year potential property investors are able to make lucrative gains from the array of potential investment opportunities on offer.
At RWInvest, we pride ourselves on our extensive portfolio of successfully completed developments, and with over 18 years of industry experience we have become one of the UK’s leading property investment companies.
Why not check our latest investment opportunities such as our luxury city-living apartments in The Prestige – or our Central Park development which is set to see a boom in tenant demand due to its trendy Baltic Triangle location.
Don’t miss out – contact one of our friendly sales consultants today who will assist you on any stage of your property investment journey.