Rental market trends: what buy-to-let landlords can expect


The UK rental market continues to shift alongside the housing sector at large, and a new rental report reveals some interesting trends that buy-to-let investors should be aware of.

Change is afoot, but one thing that seems to be retaining its resilience is the country’s rental market. Tenant demand across many parts of the UK remains high, even though the specifics of what renters might be looking for could be in for some adjustment.

Of course, rising mortgage costs are an issue for many households at the moment, and are a reason why some would-be first-time buyers are delaying making a move into homeownership. As such, the rental sector provides crucial accommodation for thousands of households.

The latest Rightmove Rental Price Tracker not only shows record-high rents as prices continue to rise and demand heightens, but some shifts in what types of properties tenants are most keen on at the moment.

Size matters for young professional renters

The average asking rent in the UK now stands at £1,162 per calendar month, according to Rightmove. This is a 3% quarterly jump and an 11% rise from this time last year. In London, rents have hit £2,343 per calendar month, which is a huge 16.1% leap from 12 months ago.

Demand among tenants is up by 20%, says Rightmove, while the number of available homes in the rental market has dipped by 9%. This is one of the major factors pushing up prices, along with growing landlord costs such as mortgages being passed onto tenants.

One interesting trend that emerged was the spike in interest in smaller properties among tenants. This is no surprise, with the cost of living crisis alongside soaring energy bills leading renters to consider the monthly savings they could make by living in a smaller home.

Studio flats are now more popular than one-beds in some city centre areas. This also indicates a general rise in the number of people wanting to live in city centres now, and the increasing competition in these areas being experienced by buy-to-let landlords.

John O’Malley, CEO at Pacitti Jones in Glasgow, said: “The desire to return to the city centre has never been more apparent and the exceptionally high demand we now experience for properties in these locations is case in point.

“In essence younger professionals want the same things as they always wanted – to go out and have a good time – and this means being back in the heart of our cities and enjoying the social amenities available.

“It’s not just the younger generation looking to live in vibrant city centre locations. The dramatic rise in the cost of living means that we are now starting to see older people downsizing to apartments to reduce household bills – and being centrally located they will also reduce travel expenses.  And this is something we expect to see more of.”

Strong yields in the rental market

Buy-to-let landlords are reporting huge levels on interest for their properties, as supply continues to fall short of the level of appetite among those looking for rental homes.

While there may be some constellation over where house prices are heading – which remains as uncertain as the current political outlook in the short term – an outright crash is being marked as unlikely by many due to high demand. But for landlords, there is more to think about.

The Rightmove report breaks down the regional variations in the country’s rental market. While the weakest yields for landlords are in London, at an average 4.9% despite rising rental prices, the strongest can be found in the north east at 8%.

Scotland (7.6%) and Wales (7%) both record particularly strong rental yields for landlords, and in England the north west (6.8%) and Yorkshire and the Humber (6.8%) are neck and neck with healthy rental returns for investors.

The East and West Midlands average yields currently sit at 6% and 6.1% respectively, followed by the south west (5.7%), the east of England (5.4%) and the south east (5.3%).


Source Buyassociation


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