introduction
In the final quarter of the previous year, a notable 63% of landlords experienced an upswing in demand from tenants, a significant surge compared to the 25% reported in Q4 2019. This revelation, based on data compiled by research consultancy BVA-BDRC, underscores a changing landscape in property investment and buy-to-let markets.
Investment opportunities
Rising Demand: A Trend Set to Continue
As the National Residential Landlords Association (NRLA) issues a warning about the substantial increase in demand for private rented housing, projections from UCAS suggest a potential one million higher education applicants in 2030, marking a nearly one-third rise from 2022. Coupled with a projected over 6% increase in the population aged 15-29 over the next decade, and an expected annual net migration of 245,000 by 2026/27, the demand for rental properties is poised to rise significantly.
Regional Dynamics: Landlords Respond to Demand
In regions such as the East Midlands (89%), the North West (88%), and Yorkshire & The Humber (87%), nearly nine out of ten landlords are witnessing a surge in demand, resulting in a parallel increase in rental prices. Comparatively, regions like the South West (81%) and Outer London (79%) report slightly lower figures, indicating a varying regional impact on the property market.
Future Outlook: Landlords Contemplate Rent Increases
Looking ahead, 51% of landlords are planning to raise rents across their portfolios in the next six months. The primary driving force behind this decision is the increased cost of property management (70%). Other factors contributing to planned rent hikes include aligning with broader market rents (62%) and, to a lesser extent, increased mortgage costs (40%), showing a slight decline from Q3 figures.
Insights from Industry Leaders: Addressing the Supply-Demand Imbalance
Richard Rowntree, Managing Director of Mortgages at Paragon Bank, emphasises the existing chronic supply-demand imbalance. While tenant demand has eased from its record highs, this dynamic continues to influence pricing. Rowntree points out that landlords in regions experiencing the most demand are likely to witness rising rents, emphasising the need for a robust and well-supplied Private Rented Sector (PRS) to ensure affordable rent levels for the millions residing in rented homes.
This analysis highlights the evolving dynamics in the property investment and buy-to-let sector, providing insights for investors navigating the changing landscape.
conclusion
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