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UK Rental Market Rejuvenated as Supply Surges: Promising Opportunities For Landlords.

In a remarkable turn of events, the United Kingdom’s rental market is showing undeniable signs of promise, leaving both renters and investors with plenty to be optimistic about. Recent data indicates that the supply of new let properties in the UK has surged, marking the most significant increase since November 2022, and this trend is a clear sign that the rental market is heading in a favorable direction.

According to Rightmove, the third quarter of 2023 has seen new rental listings surge by a striking 7% compared to the same period in the previous year. This impressive growth has resulted in a 14% increase in the number of properties available for rent. Tim Bannister from Rightmove believes that while rental prices might not drop immediately, the rate of yearly rent increases is likely to slow down significantly. This, in turn, promises a more stable rental market for all.

Recent months have witnessed a soaring demand for rental properties in the UK, and this has understandably driven up rental costs. While inflation and interest rates have remained high, renters have been dedicating a larger portion of their monthly income to housing. In Q3 2023, the average monthly rental cost in London reached £2,627, reflecting an impressive 12% annual increase. In the rest of the UK, rental costs have also grown by 10%, with an average of £1,278. Tenants may be feeling the pinch, but there’s a silver lining on the horizon.

With more individuals looking for rental properties than ever before, the competition has never been fiercer. Over the past three months, the average number of prospective tenants vying for a single property has surged by an astonishing 25% to reach 25 individuals. It’s undoubtedly a challenge, but for renters who secure their dream homes, it’s well worth it.

In addition to the growing demand for rental properties, the number of inquiries per flat has tripled since the COVID-19 pandemic. As a result, rental demand has consistently outpaced supply, creating a compelling buy-to-let market. Knight Frank, a prominent property expert, predicts steady rental growth over the next five years, amounting to an impressive cumulative growth of 22.2%.

The forecast for the years 2026 and 2027 is also encouraging, as it suggests a slowdown in rental growth. This prediction aligns with expectations of more manageable inflation and interest rates, offering renters some much-needed relief.

One interesting facet of the current rental market is the imbalance between rental prices and property price growth. While the latter has slowed due to the cost of living crisis, rental rates have continued to climb at remarkable levels. This striking discrepancy is attracting the attention of buy-to-let investors who are enticed by the promise of high yields and good-value properties.

Regions such as the North West of England, in particular, have become hotspots for property investors. Take Liverpool, for instance, a city with an average house price of £177,224 and an average rental price of £1,058, yielding an impressive 7.16%. Not only is the average price in Liverpool lower than the national average, but the average rental yield is considerably higher than the rest of the UK.

To sweeten the deal, the North West is predicted to experience a remarkable capital growth of 11.70% by 2027, ensuring solid returns on property investment in the area.

With all this good news, the question arises: why not invest in real estate? With the right research and due diligence, investors can harness the potential of the current market to their advantage. All it takes is finding the right buy-to-let investments in desirable areas, and the opportunities are boundless!