Market Update: What’s Happening in the Private Rental Sector
After a challenging 12 months for the economy, how is the private rental sector faring, and what lies ahead for buy-to-let landlords?
In this market analysis, we look at some facts and figures to give you an accurate update on the private rental sector.
National Outlook
At 5.5% in August, annual growth in rental prices in the UK is at its strongest since records began. The Index of Private Rented Housing Prices reports on both new lets and renewals.
The average rent on newly agreed rental contracts reached £1,276 in September, a 10.1% year-on-year increase (Homelet).
Nationally letting agents have an average of 25 email and phone enquiries for every property on their books, triple more than 2019 levels and five times more than May this year (Rightmove). At Sure, we received on average 45 enquiries per property let, during September, that's 180% more than the national average, giving landlords a better choice of tenant.
Burton Outlook
Over the last 12 months, the average rent achieved for homes let in Burton was £773 per month. This is a +4.2% change on the previous 12 month period. 1.3% less than the national average.
23% of homes let in the past 12 months were flats, achieving an average rental value of £625 per month. Houses achieved an average rent of £819 per month.
Derby Outlook
Over the last 12 months, the average rent achieved for homes let in Derby was £772 per month. This is a whopping +12% change on the previous 12 month period.
35% of homes let in the past 12 months were flats, achieving an average rental value of £655 per month. Houses achieved an average rent of £845 per month.
Demand
Demand for rentals is running hot. It’s up 3% on 2022 levels and a whopping 42% higher than in 20191. Reasons for this include first-time buyers struggling to get on the property ladder (an issue made worse by higher interest rates) and a shortage of purpose-built student accommodation.
Supply
The long-term imbalance between housing supply and demand shows little sign of improving, with many developers opting to go slow on new building projects due to the higher cost of materials and rate pressures.
However, predictions that landlords would exit the market in their masses (made this time last year when rates surged overnight) have not eventuated. While some landlords have sold up, many others are taking a long-term view and holding on to their investments.
And some landlords are expanding their portfolios. Of those rental properties sold in the past 12 months, about 30% to 50% were snapped up by other landlords and remain on the rental market2.
The cost of renting
There’s no escaping the knock-on effect of higher interest rates on inflation on rents. Experts predict rental inflation will be 8%3 by the end of the year, although it’s currently a few percentage points higher.
Tenant priorities
Cost-of-living pressures are at the forefront of many tenants’ minds. When asked to nominate the issues that they felt were extremely or very important, tenants identified energy prices (80%) and the cost of rent (57%).4
Other key priorities include:
- Location (58%)
- Length of rental period (57%)
- Number of bedrooms (50%)
- Transport links (42%)
- Pets allowed in property (41%)
- Garden access (35%).
Implications for landlords
We’ll let you draw your own conclusions, but here are a few points to consider:
- Given tenant concerns about the cost of gas and electricity, energy-efficient features such as double-glazing or solar panels should prove popular.
- Many of the other tenant priorities, such as access to transport and outdoor space, are ‘evergreen’ issues.
- For landlords looking to secure long-term tenancies, it’s worth noting that 41% of tenants view being able to have a pet as an important issue.
If you’d like to learn about our property management services, contact our lettings team at Sure Sales & Lettings today.
Data Sources
1 Rightmove
2 Hamptons
3 Zoopla
4 UK Renters’ Report 2023, Finbri
Dataloft