It’s something that we have been hearing for a while, but, new research from Paragon Bank has confirmed that 69% of landlords are reporting that demand from tenants is at an all-time high.
600 landlords across the UK were surveyed during the research project which also found that 36% of property owners felt that the increase was significant. However, it is important to remember that this is not a new trend.
We have known for a while that demand for rental property is on the increase, since the first lockdown in fact. This trend is set to continue and even though demand increases are likely to slow down in 2022, there will still be an increase.
So why are we seeing this sustained need for more rental property?
The biggest reason is the shortage in rental stock which can be attributed to several causes.
Firstly, more people are looking to rent property in the UK. First time buyers are finding it harder to get onto the property ladder due to the substantial rise in house prices.
Propertymark recently conducted research which found that house prices have risen by 3.5% on average, whereas salaries increased by just 2.7%. This means that the average first time buyer must spend up to 5 years longer saving for the deposit on their first house.
This is forcing young professionals to convert from short-mid term tenants to long-term renters.
On the other side of the coin, Landlords have been continuously impacted by new legislation and taxes which has resulted in many leaving the industry or significantly reducing their property portfolio.
This is before we consider the damage done by the pandemic where many landlords have had to deal with offering payment holidays and rent discounts to their tenants, not to mention the ban on evictions.
Currently the shortage of rental properties and the demand from tenants is pushing up rental prices which is going to exacerbate the issue. The rental sector is under pressure to expand and meet demand, and the government should look to incentivise landlords to make more properties available for rent. The UK property sector needs to adapt and re-focus to solve this growing issue.
It is important to note that increased demand for rental properties is not being seen everywhere. Only 54% of London’s landlords reported the hike in demand. London is also seeing the highest levels of decreased demand.
Again, there are many reasons for this including high rental prices, lack of available properties, and of course the impact of working from home. Due to office time being cut, the benefits of living outside of London and commuting on an ad hoc basis have grown.
Areas in Hertfordshire such as Stevenage, Hitchin, Welwyn Garden City, and Hatfield are now more attractive to tenants, offering respectively lower rental prices, larger properties, quick commutes and a better standard of living when compared to London.
If the government do incentivise landlords to purchase more property, it will be interesting to see if market growth outside of London continues to outstrip performance inside of the capital.
M A S O N S is one of Hertfordshire’s leading lettings agencies. We offer an award-winning letting experience for landlords through highly flexible and quality property management services covering Hitchin, Letchworth, Fairfield Park, Stotfold, Biggleswade, Stevenage, Welwyn Garden City and Hatfield.