UK Rental Market Shows Further Rise in Tenant Demand
Rental homes have been in a huge undersupply for some years, with reports in the UK's private rented centre that they are consistently seeing demand grow.
Various factors have contributed to this supply and demand issue, with one of the biggest being first-time buyers moving onto the property ladder later and later due to rising costs and inflation. This has also directly led to increasing rental prices, not only due to inflation and increased costs, but with more demand means more competition, driving prices up further.
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Strong Tenant Demand Reducing Void Periods
Void periods are a key factor in meaning the health of the rental market, as typically it will indicate the true strength of tenant demand as well as the speed of the market. It's a priority for landlords to minimise void periods to achieve the best returns possible, so understanding the performance of the market is key to reducing the period of time a rental property sits empty between tenancies.
Propertymarks' latest report shows that the average void period is 22 days per property, with some city-centre fast-paced markets coming in under this. This sat at 24 days just a few months prior, so as this period shortens we can see the demand increasing - properties are being filled faster and tenants are keen to get in as soon as they can.
Rental Arrears Dropping
Rental arrears can be crippling to landlords, where tenants withhold rental payment for months on end due to various reasonings. In January, the average of rental arrears sat at 3.5% - and has now fallen to 2%, a welcome drop for landlords and an encouraging sign that tenants are taking action to stay within their rental properties.
Rents have also increased in the past few months, with 31% of agents reporting an increase in their rental portfolio.
Demand Shows No Signs of Slowing Down
While a decrease in both void periods and rental arrears are huge wins in any investor's book, this demand is showing no signs of stopping, proving the need for more rental properties across the country. With the average first-time buyer now 34 years old, more renters are staying in the rental market for longer periods, which is overlapping with younger people getting older and leaving home for the first time, putting more pressure on the market.
The demand for more rental property has been clear for years, and we're seeing further pressure being put on the market as new properties are not coming to market fast enough to exacerbate the demand that is consistently growing.
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