Demand for rental homes is at an unprecedented level, up over 20% year-on-year. This is according to Nicky Stevenson, MD of Fine & Country UK, who adds that that higher mortgage costs and signs of a market recalibration are leading some prospective buyers to rent for longer, or to put on hold their next property purchase. She notes that the availability of new properties continues to lag behind demand and competition among renters is fierce.
“Looking at the prime rental market, the rental threshold of a prime property across England and Wales now stands at £2,800, up from £2,400 a year ago. The average prime market rent is £3,715, which equates to a year-on-year rise of 17%. A consensus of independent forecasts expects rental value growth in the UK of 4.8% over the course of 2023, with compound rental growth set to exceed 20% in the five years from this year until 2026,” Stevenson comments.
She adds that forecasters are predicting the UK’s major cities will perform strongly over the next 12 months. “Alongside London, activity levels in regional cities including Manchester, Birmingham, Leeds, Bristol and Liverpool are anticipated to remain high. With running costs and energy efficiency increasingly on the mind of homeowners and renters alike, new build city centre homes are likely to be in high demand. While the pandemic caused a race for space among renters, higher energy costs are causing many people to change their focus to smaller properties that cost less to keep warm,” says Stevenson. “Rightmove report studio apartments have overtaken one-beds as the most in-demand type of property for renters. Competition is up over 70% year-on-year as stretched affordability has seen renters look for smaller properties to enable them to stay in central locations and enjoy the benefits of a city centre lifestyle.”