Strong demand remains in the lettings market

The rental market starts 2023 as it ended 2022, with demand for property outpacing supply and rental value growth firmly in positive territory. This is according to Nicky Stevenson, MD of Fine & Country UK, who adds that the imbalance of demand and supply that typified the market in 2022 continues to support rental price growth as 2023 unfolds.

“Annual rental price growth across England and Wales is currently 9%. Apartment price growth is outpacing that of houses, at 11% versus 8.2% respectively. High levels of annual price growth in the prime markets of England and Wales are driven by activity in the capital,” adds Stevenson. “With the exception of the South East, at £3,792 the threshold for a premium market rent in London is more than double that of any other region. During 2022, 90% of all new rentals of £3,500 per month or more have been in the capital, of which 65% were apartments. Across the remainder of England and Wales, 94% of such rentals were houses.”

So, what’s in store for the rental market during 2023?  Stevenson says that while the rental market is expected to remain busy, the level of price growth is anticipated to moderate over the course of this year. “With higher mortgage costs set to impact profit margins, UK Finance predicts that £13 billion will be lent to buy-to-let landlords for new purchases over the course of 2023 and £30 billion to landlords looking to remortgage. Both are significantly lower than in 2021 and more in line with pre-pandemic levels. Taxation and legislative change is once again on the Government’s agenda, with changes to Capital Gains Tax to come into effect in April. The Renter Reform Bill is set to be introduced by the end of this parliamentary session in May 2023, although it will take longer for the Bill to become law,” Stevenson concludes.