The UK rental market is busier than ever before. Average rents have gone up for the 15th consecutive month and are now at record highs.
There are many reasons for this, but the most important is the overwhelming demand in the sector that cannot be met by the available supply.
New figures from Rightmove’s Q3 2023 Rental Tracker show that the average number of tenants enquiring about a property has increased from 20 to 25 in the last five months. This is more than triple the number of enquiries per property seen in 2019.
The data measures the total number of enquiries made by phone and online from would-be tenants to agents. When homes have become available for viewings, some agents have even reported queues of people waiting for their opportunity to look at a property.
This creates an opportunity for investors to make the most of conditions by investing in Manchester and Birmingham buy to let properties ahead of the next cycle of growth. Both cities need thousands of new homes each year to meet the demands of a growing population, but building rates cannot keep up.
Overall, Rightmove reports that the number of tenants looking to move across the country has gone up by 41% in the last three years and the number of available properties has decreased by 35% over the same time period.
That gap between the available supply and the huge demand is at the heart of why rents are going up and up in the UK.
Figures from Zoopla’s September 2023 market update back up the Rightmove data. The report notes that rental inflation has been at double digits for at least 18 months now thanks to the supply issues in the market.
The agency also reported this month that rental growth is expected to be 50% higher than earnings growth by the end of the year thanks to the high price of mortgages keeping people in the rental sector for longer.
The fastest growth in the UK can already be seen outside of London, but that’s nothing compared to what is predicted for the coming years – making this the ideal time to invest here.
The report also notes that the lack of supply means that more people are going to be forced to share with other renters in future. This potentially means that larger two- and three-bedroom properties could command an even higher premium in years to come.
Ronnie Garrett, managing director at Alliance Investments, said: “The market is seriously lacking in supply and new properties are being rented out faster than ever before.
“City centre properties in cities like Manchester and Birmingham are seeing a premium as ever, but we are also seeing more groups renting bigger apartments together.
“Investors could consider tapping into this demand and purchasing a larger property in a great location to offer people what they need at a time when the demand is at a record high.”
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