Nicky Stevenson, managing director of Fine & Country, reports that the continuous annual rise in rental values, particularly during the bustling summer months, shows no signs of imminent decline. The consequence of this growth is an increased strain on affordability, leading renters to expand their search areas.
“In the prime market, average rents have surged by 11 per cent year-on-year. Interestingly, the North East and South East are the only regions where the average price of a prime monthly rental is lower year-on-year,” explains Stevenson.
Drawing from Rightmove data, Stevenson notes the soaring demand for rental properties, currently 162 per cent above the levels recorded in May 2019. This heightened demand has led to fierce competition, with more than a quarter of properties being let above the listing price.
Zoopla’s findings show that with rents having risen faster than average earnings over the last 21 months, affordability is under severe pressure. This notion is supported by the ONS Opinions and Lifestyle Survey, with 15 per cent of renters admitting to finding it very difficult to pay their rent, a stark increase from 10 per cent in November of the previous year.
Stevenson shares, “This financial strain has forced renters to adapt their search behaviour, as noted by Rightmove, which reports a 50 km² increase in rental search areas.”
The managing director acknowledges that the imbalance in supply and demand is still prevalent. “Despite the supply of homes for rent not likely to substantially improve in the near term, a potential slowdown in the sales market could offer some relief. Fewer landlord sales and owners deciding to rent out their homes while they wait for any price falls to pass could marginally boost rental stock. Although a continuous stream of landlords are indeed exiting the sector, Zoopla confirms that this has been a trend since 2018, without signs of acceleration.”
Stevenson concludes on a strong note for the rental sector: “As a medium-to-long-term investment, the rental sector remains robust, with over one in four landlords with more than five properties planning to expand their portfolio over the next year. The Royal Institution of Chartered Surveyors predicts an annual rental growth of 6% over the next five years.”