Numerous reports show the strong demand in the private rented sector. With no sign of slowing down, rental prices and yields are on the rise.
Propertymark’s March Private Rented Sector Report shows the private rented sector is continuing to see strong demand. The number of new prospective tenants registered per branch increased for the third consecutive month.
In March, this number increased from an average of 82 in February to 84 in March. The West Midlands saw the highest number of new tenants per branch with an average of 157.
Additionally, 60% of letting agents saw landlords increase rent. This is compared to 49% in February and up by 20% from the March 2019 figure. Agents are also seeing the supply of rental stock drop.
Mark Hayward, chief policy advisor at Propertymark, comments: “It’s great to see that the rental market is continuing to boom as demand for rental properties rises.
“Of course, as demand rises and the number of properties decreases, rent prices will inflate, but we’d encourage letting agents to continue to support landlords and their tenants throughout the ongoing COVID-19 difficulties where possible and ultimately it is positive to see rent flowing and incomes returning for many people.”
Tenant incomes are on the rise
Lettings data from Goodlord shows tenant incomes increased across England as rents held steady. Tenants in the majority of regions across the country saw their incomes increase in April. The average annual salary of a tenant in England is now £25,892. This is up from £25,185 in March.
Tom Mundy, chief operating officer at Goodlord, says: “As the economy opened up in April, we saw an immediate uplift in tenant incomes. In turn, this helped keep rents steady for another month, continuing the 2021 trend of remarkably steady rental prices.”
Rental prices are increasing
With the UK heading out lockdown, average rents in the private rented sector have hit a record high of £996 per month, according to HomeLet. This is the fifth month in a row that the average rent price has increased.
Additionally, nine of the 12 regions monitored by HomeLet registered a month-on-month increase in rental values between March and April this year. And 11 of the regions saw a year-on-year increase from April 2020 to April 2021.
Andy Halstead, HomeLet & Let Alliance’s chief executive officer, explains: “We’re continuing to see a sustained demand for let property; against a backdrop of reduced stock, with landlords facing increased costs and growing concerns about legislative changes.
“As we gradually ease from protective measures, the stark reality is that we’re fast approaching a summer where rental prices could accelerate at a rate never seen before.”
Rental yields are at strong levels
With strong demand in the private rented sector, confidence remains high in the buy-to-let sector. The sector continues to show long-term prospects as more landlords plans to expand their property portfolios.
Recent research from London estate agency Hamptons also shows buy-to-let landlords are achieving higher rental yields. With recent tax and legislative changes, landlords are focusing more on rental yields and looking for ways to future-proof their property investments.