Rental demand remains buoyant versus supply according to most of the feedback from the likes of Rightmove and individual town and city feedback from Belvoir franchise owners.
In September last year, the most in demand property type was a studio flat, followed by a two bedroom house. This September, not only have two bedroom houses overtaken studio flats as the most in demand, studio flats have fallen seven places, behind bungalows and houses as renters look for spare rooms to set up spaces to work from home.
Prospective tenants will find 20% more properties in total than in September last year nationally, but available stock is only up by 2% so they will still find strong competition, especially for houses. It is a different story in the capital, where available stock is up by 80% on last September.
Available stock of the most in demand property type, two bedroom houses, is down 46% outside London and up just 2% in London. There are now 11% more studio flats available outside London, while in the capital, available stock of studio flats has doubled, up 100%.
Rental growth is being underpinned in many areas by the continued imbalance between tenant demand and the supply of rental properties, with rents rising in most cities across the UK. Renter demand has moderated from the highs seen in early summer after the first lockdown ended, but year on year, demand is still around 20% higher than in the same period in 2019.
The challenges in the mortgage market for first-time buyers trying to obtain a home loan, given the current squeeze on lending for those with smaller deposits, means that many of these aspiring homeowners will be staying in the rental market for longer, underpinning demand. This comes as overall supply into the rental market from individual landlords has been constrained. Investment levels have fallen markedly since the additional 3% stamp duty was introduced for those buying a second property or investment property in 2016.
The return of students to University as usual in the Autumn will also have boosted demand in the rental sector.
Demand remains stronger for rental property in outer London boroughs however, stretching supply and underpinning rental growth. The housing stock available in mid and outer London zones, with more houses and outside space, also fits with the search for space being seen across the rental market as a whole. The data suggests that landlords in the rented housing market are making fewer cuts to asking prices, highlighting demand in this sector. This also underlines the fact that headline rents in London are covering markets which are becoming more distinct, namely rented single-family houses, single-family flats and houses of multiple occupation.
Just as in the sales market, the data indicates that renters across the UK are also reassessing the property in which they live. In some markets, rented houses are now being snapped up more quickly than flats, indicating the additional space, often with a garden, is increasingly attractive for renters. The average time taken to rent a house is now 16 days, down from 20 days last year. The time between listing a flat and let agreed is 18 days, also down from 20 days last year.
The most popular search terms for rental property also reflect the emphasis on space for renters, with gardens, parking, garage and balcony, topping the list. The fifth most popular search term is pets, with renters looking for pet-friendly accommodation.
The average number of new prospective tenants registered per branch fell for the first time since the market reopened in May, with 82 tenants registered per branch in September, down from 101 in August. This is the lowest figure recorded since February this year, when there were also 82 new tenants registered ahead of the market temporarily closing due to the COVID-19 pandemic in March.
Year-on-year this is still the highest number of prospective tenants on record for the month of September, breaking September 2017’s previous record of 79 per branch.
Regionally, the East Midlands had the highest number of new tenants registered per branch with an average of 140, and both Scotland and Northern Ireland had the lowest figure with just 26 new prospective tenants registered per branch.
The number of properties managed per letting agent branch fell from 208 in August to 193 in September. Year-on-year this is the same as in September 2019.
77% of Savills agents in the commuter belt reported available stock levels had decreased over the past three months. Half of those agents attributed this to accidental landlords now looking to sell because of the strong sales market.
Despite strong tenant demand levels, 80% of agents in London reported stock levels increasing over the past few months. As the number of short lets and new build stock that increased over lockdown continues to work through the market, supply levels now look to be slowly correcting. However, many agents also reported tenants choosing to vacate or not to renew in order to look for a larger property with more outside space, given the changing priorities we have seen as a result of Covid-19.
Travel restrictions continue to impact some parts of prime central London and although applicant levels have significantly increased since lockdown, students and other international tenants are yet to return to normal levels.
There were 7% fewer applicants looking to rent in cities last month, but 29% more homes available to rent than at the same time last year. Meanwhile demand for homes in the countryside rose 4% in October and stock levels were 48% lower than the same period last year.
Tenant demand continued to pick-up in the three months to October (seasonally adjusted quarterly series), marking the second straight quarterly rise. At the same time, the volume of landlord instructions coming onto the market declined according to -8% of survey participants.
Also take a look at our comprehensive rental reports:
For more information about the rental statistics, read our Appendix
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