Data from the Sequence National Rental Report indicates rental activity is on the rise in the United Kingdom (UK) as demand begins to outstrip supply. The report shows that rental activity is at an 11-year high and that rental prices are growing along with the increase in demand. Buy-to-let mortgage applications have also skyrocketed by 27% on the year as more new and practiced landlords scramble to acquire new property for rental. The pressure on rents is felt no greater than in London, where both domestic and international investors are pouring money into the market to open up units for would-be renters. For more on this continue reading the following article from Property Wire.
Residential rental activity in the UK is at an 11 year high with demand pushing up rents to a monthly average of £751, the latest index shows.
New tenancies are surging, rising by 6% monthly and 18% annually while rents increased by 2% in July and are up 6% annually, according to the Sequence National Rental Report.
But there is a softening in London where there was no monthly growth and annual growth is 5% taking the monthly average to £1,437. New tenant applications have grown 16% annually and 4% monthly.
‘Levels of activity and growth across the rental market are unprecedented and showing no signs of slowing down,’ said Stephen Nation, head of lettings at Sequence, owners of Barnard Marcus, William H Brown, Fox & Sons and other leading brands.
‘New rental contracts agreed have increased to record breaking levels this month which highlights just how much the market is expanding,’ he explained.
He also pointed out that buy to let mortgage applications continue to increase, up 27% annually, and news that the Bank of England has suggested interest rates won’t rise for another three years has encouraged even more would be savers to look for greater returns. ‘Demand for new rental properties is still rising faster than supply. It is this disparity between demand and supply which has pushed rents up by 2% on month,’ added Nation.
In London, the ratio between the supply of properties and demand from prospective tenants is plateauing, with new applicants increasing by 5% compared to new properties growing by 8%.
‘Both international and domestic investors are overwhelming attracted to the capital’s exceptional asset growth and high yields, and are subsequently pushing up supply levels.
This has flattened the rents on a monthly basis, but they have still grown by 5% annually and the record levels of activity we have seen in the region, tenancies agreed up by 13% on month, demonstrates the continued strength of the London market,’ explained Nation.
The number of new tenant applications has increased by 4% on month and 16% annually as demand for rental property across the nation continues to grow. By comparison, the supply of properties has increased at a lesser rate on month, 3%, which explains rising monthly rents. As such the ratio of new applicants to every new property remains at 4.4 to one.
In London, while tenant demand continues to grow on a monthly basis, up 5%, the supply of properties is rising at a faster rate, 8% on month. When examining the annual growth the divergence is greater. New applicant registrations up 1% compared to new property registrations up 16%.
Nation said that this imbalance of supply over demand has caused the ratio to decrease to 4.7 applicants to every new property, from 4.8 to one, and this decline in competition has caused rents to remain static on month.
‘Historically activity continues to increase until October, so we would expect more records to be broken next month,’ he added.
This article was republished with permission from Property Wire.