The ongoing mismatch between supply and demand in the UK rental market has driven asking rents outside of London to a new record high.
National asking rents outside of London hit an all-time high of £1,088 per month. Annual rental growth hit 11%, which is the first time year-on-year asking rents outside of the capital have surpassed 10%.
Supply versus demand
Rental demand is up by 6%. At the same time, the number of available rental properties is 50% lower than this time a year ago in the UK rental market.
The result of this disparity between supply and demand means tenants looking for a new rental property to move to are seeing the most competitive rental market that Rightmove has ever recorded.
Tim Bannister, director of property data at Rightmove, comments: “In the first three months of this year, we’ve seen tenant demand exceed the high levels set last year, which when coupled with the fewer available homes for rent, has resulted in the most competitive rental market we’ve ever recorded.
“There are several factors affecting supply and demand. On the supply side, we’re hearing from agents and landlords that tenants are signing longer leases, which has prevented some of the stock that would normally come back onto the market from doing so.”
Despite there being a recent rise in properties being listed for rent, demand still far outweighs supply. Rents are forecasted to remain high across the next year with more rental growth expected.
With rental demand at such high levels, this further highlights the importance of the private rented sector and the need for more high-quality properties to be added to the UK rental market.
How does this impact tenants and landlords?
This competitive market is likely daunting for many tenants, making it even more important for tenants to have their finances and documents ready before looking for rental properties.
Many professionals in the property industry are also predicting more properties will become available to rent in the coming months. This would provide much-needed choice for tenants.
Currently, there are more than triple the number of tenants enquiring as there are available rental properties in the UK rental market. This means many landlords will likely be able to choose between multiple suitable tenants for their properties.
With demand this high, landlords usually have shorter void periods between occupation of their rental properties. However, individual landlords’ experiences will differ with location being a primary factor.
Minimising void periods reduces the amount of time a property is not earning a rental income. On top of that, landlords with the most in-demand properties may see some tenants who are willing to pay higher prices to secure them.
“When it comes to demand, we’re still seeing the effects of the pandemic, whereby tenants are balancing what they need from a home and how close they need to live to work with where they can afford,” adds Bannister.
Where are the top hotspots in the UK rental market?
The north-west continues to see strong demand from tenants and has led the UK rental market in rent hikes. Manchester, Liverpool and the surrounding areas are extremely popular hotspots for tenants and property investors alike.
As two of this quarter’s top five rental price hotspots, Manchester and Liverpool have been home to asking rents increases of 19.3% and 17.1% respectively compared to this time last year.
Demand has also increased in areas surrounding these two major cities. Seven of the top 10 rental demand hotspots are in nearby cities across the north-west of England.
While offering ever-improving job prospects, the locations offer better value than areas around London and in the south-east. This is another draw for people looking to rent and buy there, particularly as the cost of living crisis is such a huge concern.
With surging energy bills and fuel prices impacting millions of households, accommodation costs are often people’s largest monthly outgoing. Because of this, we will likely see even stronger demand for these areas offering better value in the coming months and years.
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