Good news: The rental market is stabilising
With a rapid increase in rental inflation in recent years, the good news that the UK lettings market is becoming more stable for both landlords and tenants is welcome news to all ears.
So why is this and what does it mean for landlords and tenants?
Earnings growth of 6%*
According to figures released by the Office for National Statistics, annual growth in regular earnings was at 6% in February 2024.* And with rental inflation at its lowest in two years, renting has become a little more affordable. While no one is suggesting that renting is becoming cheaper, the market is a little less frantic without rapidly spiralling costs. Increased earnings and inflation are putting the cost of renting into perspective and make it more palatable.
The economy is improving
With the economy growing in the first quarter by 0.6%* of 2024, the economic outlook improved further as this year progressed. With lowering inflation as the Bank of England makes headway towards their target of 2%, slow, sure-footed steps of stability and improving conditions mean increased confidence in the lettings market. All of this helps to reduce the financial pressure on landlords and tenants.
More choice for tenants
There is more choice for tenants, with 11% more properties available to rent in Q1 of 2024 compared with last year.** It can be frustrating for tenants searching for a new home. With a little more choice as more affordable homes for rent enter the market, tenants have a better chance of finding a better home. Happy tenants make for a happier market as tenants settle down enjoying good homes. With fewer void periods (when rental properties are vacant), uncertainty is replaced with confidence for landlords.
More opportunities for landlords
While the market is in a better place, there is no doubt that if you are investing in the buy-to-let market, you need to watch your costs. Many landlords will be delighted to see the costs of materials and borrowing improve. The rental market might be stabilising, but the fact remains that there is a shortage of rental properties on the market. While rental inflation might be at its lowest in two years, average UK rental prices increased by 7.8%*** on last year. This presents more opportunities for landlords to invest in the buy-to-let market and is proof of the high level of demand in this sector.
In summary
The UK rental market is becoming more stable with improving affordability levels, which are important steps in the right direction for tenants and landlords. However, the reality is that this sector needs more landlords to meet the ever-growing demand for good homes. Using a local letting agent is still the most comprehensive way for tenants to enjoy better properties and for landlords to match their properties with tenants. Working together so that the standard of homes, and the renting and letting processes improve with the economy is high on the agenda for many, including the government. The Renters Reform Bill will also improve life for landlords and tenants, and with the guidance of a good agent, is something to embrace rather than fear.
Tenants and landlords get in touch to discuss all your property needs.
ONS*
Rightmove Rental Index**
Zoopla March Rental Market Report***
This article was originally published by BriefYourMarket and is reproduced here with their permission.
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