New research from TwentyEA shows that there is a lack of rental properties in the maret and this is pushing rents higher. On average rents were £1,652 per calendar month (pcm) at the end of 2022, which is an increase of £200 since 2021 and almost £300 since 2019.
New Instructions (new rental properties coming on the market) were down by 7.8% compared to 2021, and by over 25% since 2019. This is being mainly driven by smaller landlords withdrawing from the market as tax, regulatory and cost environments have become less favourable.
The lack of supply has also been compounded by an increase in demand, as tenants are undoubtedly deferring decisions to buy, because of higher house prices, inflation, and interest rates. These increases in rents (22% since 2019) are making the market and returns much better for landlords, offsetting any increase in cost and generating more profit.
The pressure on London, Manchester, and Edinburgh in terms of supply is abundantly clear in significantly reduced leases agreed in 2022, compared to 2021. Elsewhere numbers were generally flat, with Peterborough and the Southwest being outliers, showing some modest growth.
Stuart Ducker, strategic solutions director of TwentyEA, commented: “This trend is likely to continue as higher interest rates and inflation may be passed on by landlords whilst supply constraints and demand pressures continue to apply”.
“Our research shows that the lack of rental properties available in the market in 2022 in comparison with 2021. Aside from Inner London, all regions sit between 1.5- and 3-months stock. The situation has deteriorated considerably in London, Scotland, and Northern Ireland.
“Any major improvement in rental stock availability remains in question with interest rates rising, a squeeze on the availability of mortgage particularly buy-to-let and the fiscal and legislative changes from prior to the pandemic.”