Supply And Demand Imbalance For Rental Properties
An out-of-balance rental market has left renters worried. Worried that rent prices will increase due to supply and demand issues. A recent survey by the RICS has found a demand for rental properties has continued to surge. But, what does this really mean for the market when there imbalance between renters and properties?
Rental Market Growth
Research from Zoopla Rental Market Report suggests that rental growth is at its highest level since 2008. While London has seen a rental decline at -3.8%, other areas across the UK have seen growth. The South West is at a ten year high with a growth of 7.6%, Wales has seen a 6.4% rise and the East Midlands a rise of 6.8%.
In terms of the rental cost, the average monthly rent outside of London is now £790. This has increased from £752 from July 2020. In London, the average rental is £1,593 per month. What’s more, the latest RICs snapshot suggests that 64% of respondents expect rental costs to go up in the next three months.
Their statement said: “In the lettings market, the headline tenant demand indicator (quarterly seasonally adjusted data) picked up to post the strongest reading since the closing stages of 2016. At the same time, landlord instructions fell once again, extending a run of continuous decline stretching back over the past thirteen quarters.”
“Given the current imbalance between supply and demand, near term rental growth expectations were driven higher, with the headline net balance of +25% in July representing the most elevated reading in twelve quarters.”
Pricing Renters Out Of Areas
There has been increasing concern that the taxation against landlords is reducing the supply of properties. If landlords keep their properties, then many are looking for ways to mitigate the extra taxation by increasing the rental cost. So lack of supply, coupled with increasing costs, may be pricing many renters out of high-demand areas.
What’s Causing The Lack Of Rental Properties?
- Rising house prices causing landlords to sell their properties for higher returns
- Tax increases on buy-to-let properties
- Landlords putting their properties on the short-term rental market, such as Airbnb.
What Does The Rental Market Look Like In The Future?
With the increasing costs that landlords face and the buoyant selling market, the number of available rental properties will likely continue to decline. There is also a concern that the forthcoming EPC changes may also impact a landlord’s decision.
The EPC changes, where a rental property may need to be a C rating or higher, may mean costly retrofitting and renovations to help increase a property’s energy efficiency.
At Assessment Hive, we’re here to help landlords to increase their cost-effectiveness and rental efficiency. We can help with EPC certificates and recommendations to help landlords understand if their property will be ready for the latest EPC changes. To find out more about how we can help, get in touch today.