The buoyancy of the UK rental market continues with over 40% of renters stating they believe rents will be higher in 12 months’ time, according to results from Rightmove’s latest quarterly Consumer Confidence Survey.
Miles Shipside, director of Rightmove comments: “For the second consecutive quarter more than 40% of renters are revealing their fears of another upwards movement in rents. They are at the sharp end of competitive demand from other renters, experiencing a struggle to find suitable rental accommodation and losing out on properties to higher bidders. Rental agents are reporting turning many prospective tenants away, with only those with the best references passing the beauty parade to get to view the limited new stock on offer.” Cases of gazumping are occurring where demand significantly exceeds supply. In spite of over a year of upwards rental pressure, 42% of renters feel that rents will be higher still in another 12 months, despite rents having already increased substantially in many locations. The upwards price pressure on rents is highlighted by that fact that the stock of available rental properties advertised on the Rightmove website is 23% down year-on-year. The return of more landlords to buy more property to rent is sorely needed to satisfy the growing housing crisis for those unable to get a mortgage to buy, and also unable to find a home to rent.
The numbers of ‘trapped renters’ who would like to buy but can’t afford to remains high at 55%, although a drop from 57% last quarter suggests that depressed prices may be encouraging more renters to take the plunge into home ownership. The incidence of ‘institutionalised renters’ remain consistently high with nearly 1 in 3 resigned to stay in rented accommodation for 3 years or more. That the combination of longer-term tenancy and improving rental returns provides a more stable and low risk investment should, in theory, increase the number of properties in the rented sector. However, the influx will remain restricted to those investor landlords who have high levels of access to cash to lessen their reliance on hard to obtain mortgage funding. Shipside comments: “The momentum for further rises continues, even though some agents are reporting increases of 5% to 10% in the last year already. This is tough news for tenants who have already experienced rent rises prior to this latest report. It looks like there is no let-up in demand from fellow renters. This means another rise upon renewal with your existing landlord or an even larger jump if you enter the open rented market to get one of the increasingly scarce new let opportunities.”