Landlords Corner – New Challenges for Landlords
As we move into November 2022, there are still new challenges for landlords and tenants, in what has been an extremely challenging year. Demand is rising in the rental market, but so is competition amongst landlords.
You must be competitive in busy rental market
There is close to 5 million properties available in the English private rental sector (PRS), and in the past decade, this figure has risen by 18.8%. The number has gone from 4.1 million to 4.8m. A study by Ocasa believes that by 2025, the number of PRS property in England will be over 5.1m.
This is a lot of homes, but there is significant demand for landlords. Even though many people are looking for rental property, there is a lot of competition in the market. Landlords who provide the highest standard of service are more likely to let their property to the best tenants and achieve success in the market.
Jack Godby, Sales and Marketing Director at Ocasa, commented: “The government is trying to dampen the Private Rented Sector by making it less and less cost-effective to purchase additional homes for investment purposes such as buy-to-let. But there is still a huge need for rented homes in England - not everyone can or wants to buy their own home. Perhaps the new PM’s latest tax incentives will give a boost to the market, but in order to ensure that there are enough good homes for those who need them, more still needs to be done to make buy-to-let more attractive for landlords.”
Demand for rental property is rising, as are rents
Rightmove is a trusted source in the property and rental market in the UK, and their recent findings show a quarterly increase of 3.2% on rent. This is only the third time on their record that rents have risen by 3% or more in a single quarter. Rents are rising sharply, and Rightmove states demand is 20% higher than it was this time last year.
The reality of rising prices, and interest rates, means many prospective homebuyers will rent for longer. There is even the likelihood that some will decide to sell, and then rent, over fear of missing mortgage payments.
These are challenging times for everyone, but there is no denying the demand for rental property will increase. This means rental prices are likely to increase, but landlords must be aware there is a ceiling that many people face in what they can pay.
It will be challenging to find the balance in a landlord generating enough income to pay their bills without making life untenable for tenants.
Tim Bannister, Rightmove’s Director of Property Science said: “It’s a real challenge for renters at the moment, as there are simply not enough homes available to rent to meet the demand from people enquiring. Whilst it's positive news that most areas are seeing more properties coming to market, with London the notable exception, ultimately the gap between supply and demand is becoming wider across the board.”
Tim continued by saying; “We will need a significant addition of homes to come onto the market to even begin to balance the scales. Those looking to rent a smaller property in the next few months may find that they face some added competition from would-be first-time buyers, who have had their purchase plans scuppered for now due to the sudden rise in mortgage interest rates, and are now looking to rent.”
Tim Bannister, Rightmove’s Director of Property Science said: “It’s a real challenge for renters at the moment, as there are simply not enough homes available to rent to meet the demand from people enquiring. Whilst it's positive news that most areas are seeing more properties coming to market, with London the notable exception, ultimately the gap between supply and demand is becoming wider across the board.”
Tim continued by saying; “We will need a significant addition of homes to come onto the market to even begin to balance the scales. Those looking to rent a smaller property in the next few months may find that they face some added competition from would-be first-time buyers, who have had their purchase plans scuppered for now due to the sudden rise in mortgage interest rates, and are now looking to rent.”
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