A recent report from Paragon bank shows that tenant demand has increased by 62% in the last year, the highest increase that’s been recorded since 2011.
The increase in demand is exacerbated by a low supply of rental opportunities. A property investor group, Propertymark, have reported that the average agency only has 8 properties available at any 30-day period. In that time frame they may have as many as 93 tenants registered and looking for property.
The disparity between the supply and demand has resulted in increases in rental prices, and the average length of the renter’s tenancy. A report from earlier this year by the Office of National Statistics has shown a 2.4% increase in rental prices in the first 3 months of 2022 alone. Over the same period, the average renter’s tenancy increased by over 2 months. It would seem these 2 metrics are linked, with the increasing rental prices limiting a tenant’s ability to move.
But why is demand for rental properties so high?
Supply for rental properties has been consistent for the past decade, the issue comes from the massive rise in the requirement for rentals.
House prices in the UK are rising at the fastest rate we’ve seen in 15 years according to Halifax. Despite the economic impacts of Brexit and Covid the average property price in the UK has reached the lofty height of £292,000. This rise has meant that many are having to rent for longer whilst saving for their property. But with recent increases in the cost of living considered, getting on the property ladder is seemingly out of reach for some.
It seems however, there are positives in this for the renters, a study by the English Housing Survey revealed that 84% of renters they surveyed were satisfied with their accommodation which may suggest it’s a positive choice. Regardless of the motive or reasoning, the pool of UK renters is growing rapidly.
It goes without saying that the current situation is far more advantageous for current and aspiring landlords then it is for renters. Rapidly increasing rental prices, rental demand and tenancy length are making residential renting incredibly profitable for any investor.