Demand and rents on the rise across the private rented sector

Demand and rents on the rise across the private rented sector

In recent years, demand in the private rented sector has surged, and that trend is continuing to be seen, particularly as we are hitting the traditional summer peak for the lettings market.

After numerous reports of tenants chasing a small number of properties to rent across Britain, BBC News commissioned Rightmove to thoroughly search its data and gather a picture of current demand in the private rented sector.

What’s happening in the private rented sector?

In May, there were an average of 20 requests from prospective tenants to view each property available to rent. This is up from an average of 19 enquiries per property in 2022, and it has more than tripled from six in 2019. 

The queue for tenants is even longer in certain areas, including the North West of England where the average is 30 applications for each rental property. And in every single region of Britain, this number has at least tripled since 2019, showing the demand landlords are currently seeing.

Anecdotal evidence has also suggested that tenants are increasingly offering more than asking rent to secure rental properties, even leading to bidding wars in some circumstances. This means landlords aren’t having to wait long to fill their rental properties, which is helping minimise void periods.

What’s behind the recent rent rises?

The mismatch between supply and demand in the private rented sector is contributing to sharp increases in rents. This is happening as landlords have also been hit with rising costs, including from repairs and regulation to increases in mortgage rates.

In May, rents increased for the 14th consecutive month by a record 5.1% in one month, according to analysis by The Guardian. Rents are increasing at the fastest annual rate since comparable records began in 2016. Data from the Office for National Statistics shows the average rent paid in England is currently £960 per month.

This is happening as the rental market is struggling to meet an increasing level of demand from people unable to buy a home. Rising mortgage rates and the cost-of-living crisis have prevented many from entering the UK property market over the past year, making home ownership a more distant prospect for some.

What’s expected to happen moving forward?

As demand is expected to continue outpacing supply, rental prices will likely continue to increase, particularly as there is a chronic housing shortage across the UK. Young people are being forecast to rely on renting for longer moving forward, which shows the growth needed within the private rented sector.

With the ongoing financial challenges, tenants may continue remaining in their rental homes for longer. This could help them avoid additional rent increases and the struggle of not being able to find a rental property at all. Staying in their rental homes for longer can also provide tenants with more stability, while reducing void periods for landlords and improving profits.

The lack of supply creates opportunities for property investors to bring forward additional rental properties. Adding stock across the UK private rented sector can also provide benefits for tenants searching for their next rental home. 

Prime Property Agents has a number of property investment opportunities available across the UK, in areas seeing particularly strong tenant demand. Get in touch for more information.