Rents in the property market have continued to soar, albeit with a slight cooling in the pace of growth. This is according to Nicky Stevenson, Managing Director of Fine & Country, who adds that the ongoing supply-demand imbalance coupled with economic uncertainty has encouraged some property owners to return to rental market, while potential buyers are deferring their purchases. These factors are contributing to the persistent upward trend in rent prices.
Stevenson says that according to the latest market data, the prime rental market is experiencing a remarkable average rent of £3,813, marking a substantial 10.5% year-on-year increase. “While the rate of growth has slowed somewhat compared to the previous month, the shortage of available properties remains a key driver behind the upward trajectory in rental prices. Renter demand has seen a notable increase of 3% compared to June 2022 and a staggering 42% surge since June 2019. Although there has been a slight improvement in the availability of properties, data from Rightmove indicates that available properties are up 7% on the previous year, but a significant 42% below the levels recorded in 2019,” she adds.
Moreover, the lettings market faces a constraint on supply due to pressing environmental issues. Recent research revealed that over half of all homes in the private rented sector require upgrading to meet the target Energy Performance Certificate (EPC) rating of C or above by 2028. Furthermore, a survey conducted by MRI found that 72% of renters prioritise environmentally friendly management of their rented buildings.
“As a result of the scarcity of available properties and surging rent prices in the open market, renters are now opting to stay in their properties for longer durations. Dataloft Rental Market Analytics reports that the average initial rental contract length during the second quarter of this year was 12.7 months, a significant increase from the 10.5 months recorded during the same period in 2019. Recognising the needs of renters and acknowledging the challenges posed by the current market, the proposed Renters Reform Bill includes a noteworthy proposal to end fixed-term Assured Shorthold Tenancies, aiming to introduce open-ended rental contracts and enhance flexibility for renters. Industry experts suggest that this legislation reinforces the ethical practices followed by many investors and facilitates the removal of rogue landlords, thereby raising industry standards,” Stevenson comments.
In light of these market trends, renters, property owners, and investors alike are closely monitoring the property landscape and exploring solutions to address the ongoing challenges. Market players are advised to remain vigilant, adopt environmentally-friendly practices, and consider the evolving legislative landscape to ensure sustainable growth and stability in the sector.