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North West Landlords Notice Rise in Tenant Demand

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    Tenant Demand Continues to Rise Through the Last Months of 2023

    According to new research from Paragon Bank, more than half of landlords noted a rise in tenant demand during Q4 2023. For UK buy-to-let property investors, this could mean that rental yields will remain high throughout the opening months of 2024, particularly since rental growth is expected to reach 6% this year.

    Let’s look at the latest tenant demand figures in greater detail.

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      What Areas Are Seeing Significant Rises in Tenant Demand?

      The research by BVA BDRC on behalf of Paragon Bank indicates that 37% of landlords reported a significant rise in tenant demand during the three months leading up to the end of December, while an additional 26% observed slight increases.

      The data analysis by region highlighted that the North West had the most substantial demand, with 75% of landlords reporting increased tenant demand. This marks yet another piece of good news for the North West property market, following Savills’ cross-sector forecast, in which the real estate services company expects North West buy-to-let to see 9.2% returns over the next 12 months.

      Following closely were Yorkshire & The Humber, where 74% of landlords identified rising tenant demand, and the East Midlands, with 71% reporting a similar trend.

      The survey also established a correlation between increased tenant demand and rental inflation. Landlords in the most in-demand regions were likelier to report rent increases, except for the East of England. In these high-demand areas, such as the East Midlands (89%), the North West (88%), and Yorkshire & The Humber (87%), nearly nine in 10 landlords indicated that rents were currently on the rise, compared to around eight in 10 in the South West (81%) and Outer London (79%).

      Looking ahead, 51% of landlords plan to raise rents across their portfolios in the first half of 2024. The primary motivator for this decision is the increased cost of running a property, cited by 70% of landlords. Other factors contributing to planned rent increases include adjustments alongside broader market rents (62%) and rising mortgage costs (40%), though the latter has seen an 8% decline compared to Q3.

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      What Do the Experts Think About Tenant Demand in UK Property?

      Richard Rowntree, Managing Director of Mortgages at Paragon Bank, said: “Although tenant demand has come off its record highs, there remains a chronic supply-demand imbalance across large parts of the country.

      “Although it’s a complex issue with many factors at play, the supply and demand dynamic dictates that we pay more for goods and services that are in high demand and short supply. It is unsurprising then to see that the landlords in the regions seeing the most demand are amongst the most likely to see rents rising.

      “This illustrates how a healthy, sufficiently supplied PRS is needed to maintain rent levels that are affordable for the millions of people that live in rented homes.”

      So, while rental demand continues to rise, now could be the best time for property investors to purchase new homes. Mortgages have come down compared to where they were a year ago, and investment is more affordable due to lower inflation. Knight Frank has also changed its forecast for 2024, now predicting that property prices will rise by 3% by the end of the year. As such, prices may be cheaper at the start of 2024 than at the end. With the North West buy-to-let market expected to earn significant returns, buy-to-let investors may want to focus their investment strategy on that area to find good-value property with lucrative yield potential.

      See some of our most recent investment guides for more on the UK property market in 2024:

       

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      Author

      Dale Barham

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

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