Lettings Market Update

Lettings Market Update

As a landlord, you need to know if the market has a sound footing. For future investing, it’s vital to get insight into the potential opportunity. We share the key facts from across the UK.

Demand/supply imbalance may gradually reduce in 2022

  • As the post pandemic surge eases, rental demand may start to fall back, creating more competition and a slowdown in rental growth.
  • Stretched affordability will start to limit rental growth but this impact will vary greatly across the market, depending upon such elements as the demographics of different renter segments.
  • City centre demand remains high as people settle back into a pre pandemic way of life in many cases and there is a continued return to 'normality' in these locations in both work and leisure arenas.

The upward rise in demand and the lack of rental supply has seen rents increasing at the fastest rate in years. London has seen rental value growth gather pace, however due to the large falls it experienced during the pandemic it is only recently seeing rental values out-perform where they were back in March 2020. Rental growth in London is expected to settle back to more modest levels later in the year.

10%* rental growth across the UK confirms a continued rise

10%* rental growth across the UK confirms a continued rise

Upward pressure on rental prices means it could be an opportune time to be a landlord. Could you be earning more from your property?

A 10.0% rise in the average rent across the UK (including London) continues to sustain the upward trend, with average rental values reaching new record highs. This is due to the continued surge in demand with a particular impact in city centres where there is a greater supply/demand imbalance. This impact is being felt far and wide across the UK. A 15.7% rental value rise in London serves to dramatically highlight this point.

15.7%

Rental value increase in London

10.5%

Rental value increase in the South West

9.7%

Rental value increase in the East Midlands

10.9%

Rental value increase in the North West

The post pandemic surge in demand is still a strong market factor

The post pandemic surge in demand is still a strong market factor

With a continued flow of renters back to city centres, a tight supply is seeing a rapid rise in rents.

Previously, it was the commuter belt locations that were experiencing the greatest growth for cities, as people looked for more space and working from home opportunities increased. But now more central locations are seeing a bounce back in demand too. This is being fuelled by a return to office working and the return of students and international travellers. Rental rises in city centres have been outpacing those of the suburbs. Supply remains extremely constrained, with a reduced number of landlords, and tenants staying put to try and get better deals on their existing rental renewals.

10.2%

Rental value increase in Cardiff

11.0%

Rental value increase in Edinburgh

13.0%

Rental value increase in Birmingham

14.3%

Rental value increase in Manchester

Rising rents impacts affordability – but properties still let quickly

Rising rents impacts affordability – but properties still let quickly

The growth in demand and lack of supply remains a significant factor, as it has done for over a year now.

Over the short-term, the bounce-back in demand quickly impacted available stock levels of rental properties and as noted the rapid rise in rents. Rent has however become a greater percentage of gross income, affecting affordability. This may result in rental rises slowing down over time and tenants opting to move less frequently so as to avoid potentially higher rents at a new location. Longer term there are also challenges around landlord investment into buy-to-let, due to such aspects as additional taxation and regulation changes. The stamp duty holiday caused a short-term uplift in landlord activity, but not enough to offset longer term stock supply issues. This will help to underpin rental rates. The lack of rental properties will remain a feature of the market for this year and potentially beyond.

£88

Average monthly rent increase since March 2020

37%

Rent as a percentage of single earner gross income

14 days

The average time to let, compared to 20 days in July 2020 – nearly a week faster

We're here to help

If you are a landlord looking to improve your rental yield, or you would like to find out more about your property’s rental value:

Statistics from the Zoopla Rental Market Report February 2022 except where otherwise stated.
*Countrywide average rental value for new lets Jan-Apr 22 compared to Jan-Apr 21.