UK Rental Demand on the Rise
In recent months, the UK has seen massive demand for rental property across the country, and due to supply issues, this is expected to continue into 2023.
The Guardian has reported that the number of people enquiring about homes to rent on Rightmove has risen by 23% in the past year, a huge increase in enquiries which is proof of huge market demand.
There are several reasons why this is happening, and many reasons why this is great news for buy-to-let investors in the UK.
In this blog, we’ll break down just why demand is so high for rental properties in the UK right now, and how buy-to-let property investors are in the perfect position to thrive in this climate.
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Why Is Rental Demand So High?
There are several factors affecting the UK housing market right now which are causing more and more people to choose to rent for now rather than purchase property to live in.
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1. The Cost of Living Crisis
With the rising cost of essentials such as energy bills, fuel and food, many are finding it harder to afford to purchase property given the large up-front fee.
The current average price of property in the UK is £295,000, according to the UK House Price Index.
While there are regional variations, with areas like London having much higher prices, for example, the simple fact is it is much more expensive to buy property right now.
For many, the tightening of their monthly budgets means that such a large expense as a house simply isn’t possible right now, which is great news for the rental market as it means more potential tenants looking for properties.
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2. Rising Mortgage Rates
A side effect of the mini-budget in September 2022 was that mortgage rates rose sharply, with two-year rates rising to a peak of 6.52% in mid-October.
Right now, rates have calmed slightly, but are still higher than normal. This means it is more expensive to use a mortgage to buy property, which is putting off many who were considering buying a home.
By renting, they can avoid the rising interest rates and wait for mortgages to calm down again before deciding to buy themselves.
For investors, this means acting fast to secure buy-to-let property as this cause of demand will not last forever.
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Why Is This Good For Investors?
There are several reasons why this is good news for investors, and why high rental demand is something that they should be acting on as soon as possible to ensure they get the best returns on their investment portfolios.
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More Potential Tenants
The obvious reason this high demand is good is that more people are looking to live in rental properties.
For investors, this means it is easier than ever to find tenants for their investment properties, and they will be able to earn rental income much faster by filling their vacancies with renters looking for high-quality properties.
This also means investors can make the most of the increased demand by potentially increasing the rent they charge to meet market levels, as rents have been rising steadily alongside this high demand.
Homelet’s Rental Index reports that rents rose by over 10% from October 2021 to October 2022, showing that investors can make more from their investment properties thanks to this demand.