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Surge in Demand for Rental Properties.

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The property market has had a rocky and tumultuous few years. The after-effects of COVID were unforeseen and unprecedented. From the mass exodus of the big cities into greener, suburban spaces to property prices drastically falling, these recent and sudden changes can put some potential investors off.

Despite these challenges and changes to the property market, it is still a highly popular choice for investors. According to a study by Octane Capital, the UK is fourth in terms of size within the worldwide rental market, falling behind the US, Germany, and Japan.

With the modern landscape around work changing, such as the increase in remote work, the market for rentals has seen a rapid expansion. Demand for rental properties is up by 43 percent on last year, reports the property portal Zoopla, however, the number of properties available to let is down 23 percent. The lacking supply and growing demand means it has become normal for each new rental property to attract 30 to 40 inquiries and applications. The level of tenants now registered as seeking homes is 188% higher than in December last year. Meanwhile, more than three quarters (77%) of member agents had recorded monthly rental price increases in august and September.

This has allowed landlords to push up rents by nearly 19% compared to the year before, according to Rightmove’s research. Factor in the cost of living crisis ad rising inflation which will shift more finances into the hands of landlords, bringing higher yields back into the sector, and then further investment in the future.

Rent prices increase

Between August and September this year, rent prices increased by 1.4% to an average of £1,159 PCM. According to the latest rental index from Homelet rents rose throughout every area within the UK in September, with London seeing the largest monthly increase of 2.5% to £1,945.

The buy-to-rent sector has seen over £4 billion of investment over the last year. With 14,550 completions in 2021, this year is set to triple those numbers. With more to offer tenants and a focus on long-term renting, they usually demand higher rental prices.

The introduction of big names into the Build-to-Rent sector, such as Lloyds Banking Group, which announced its entry into the private rental market with the launch of its Citra Living brand, will bring further developments and loosen constraints of supply in the future.

The build-to-rent market offers opportunities for investors and developers to address and take on the challenges within the UK rental property market.