While we may be entering the colder seasons, the rental market continues to heat up. According to Nicky Stevenson, Managing Director of Fine & Country, demand for property is outpacing supply and rental value growth is firmly in positive territory, having been in double digits for 18 months.
“According to HomeLet, the average rent on newly agreed rental contracts reached £1,276 in September, a 10.1% year-on-year increase. Rental growth in the prime rental market is also strong, with growth of up to 14.2% in the South West. Hometrack reports that rental growth is forecast to end the year at 9%, then slow to 5-6% in 2024. Demand continues to be extremely strong, with three quarters of agents saying there are over 11 applicants per average listing on the rental market, and 45% reporting more than 20. Rental growth continues to outpace earnings, although over two thirds of agents surveyed in the Dataloft Inform Poll of Subscribers said they had not seen an increase in renters falling into arrears,” Stevenson comments.
Looking at legislation impacting the sector, Stevenson says that the previously proposed regulation to require rental properties to have a minimum EPC rating of C for new tenancies by 2025, and for all properties by 2028, has now been scrapped. “Although there has been a U-turn in the legislation, many landlords have already started preparing their rental properties in anticipation. Research conducted by Shawbrook Bank shows that four out of five UK landlords have already made preparations to comply, and almost half of landlords have spent between £500 and £20,000 on improving or investing their property in the last year,” says Stevenson.
She notes that this investment will not have been futile in terms of time and resources; upgrading energy efficiency is likely to make a property much more attractive to renters. Around 78% of renters surveyed in the Dataloft, Property Academy Renter Survey 2022, said that the EPC rating was important.