Tenants face growing competition as demand for rental properties across the UK soars. As owning a home has become increasingly elusive for much of the UK population, the rental market has boomed. So how exactly have these trends played out, and what do property experts predict for the rental market in 2022?
Demand in rental marketing is growing quickly
In the 3rd quarter of 2021, the UK rental market witnessed its strongest growth in 13 years, a trend that continued into the end of last year.
According to recent findings by the National Residential Landlords Association, demand for rental housing remained consistently high in the 4th quarter of 2021: 56% of the private landlords surveyed in England and Wales recorded a higher demand for private rental properties.
The new year brought even further growth: at the beginning of 2022, the number of tenants looking for a rental property was 76% higher than it was between 2018 and 2021.
Big cities like London, Manchester, Edinburgh, Birmingham and Leeds continue to attract tenants, whilst areas in the South West of England have also seen skyrocketing demand.
Prospective tenants are facing tough challenges.
A rapid increase in the number of people looking for rentals, coupled with a decrease in the number of private landlords, means that fierce demand is failing to be met.
Private landlords across the UK that plan to reduce the number of properties they let (24%), far exceeds the number who intend to let out new homes – just 14%.
In fact, according to Zoopla, there were 39% fewer homes available on the rental market in January when compared with the 5-year average at this time of year, resulting in what some are calling a ‘rental housing supply crisis’.
The situation “is only set to worsen as renters continue to feel the effects of a market starved of a healthy supply of homes for private rent,” says Ben Beadle, Chief Executive of the National Residential Landlords Association. “The government needs to accept that for all the rhetoric about homeownership, many people need to rent beforehand. Policies that dampen investment in the private rented sector serve only to reduce choice, drive up rents and, as a result, make homeownership more difficult to achieve.”
Data put forward by the economic consultancy Capital Economics would seem to confirm this: their research projects that the number of homes available for private rent could fall by more than 500,000 over the next 10 years.
Supply is failing to meet demand
The national shortage of available housing is, naturally, having a knock-on effect on rent prices, driving up costs in the more popular areas, where properties remain scarce.
According to Rightmove’s quarterly tracker, average rent prices have risen by 9.9% in the last year, the highest annual increase on record.
With increasing supply and demand issues set to continue throughout 2022, property experts predict that rents will rise by a further 4.5% across the UK.
Whilst the forecast doesn’t look promising for renters, this is especially welcome news for ambitious UK landlords who have encountered an unfriendly tax and regulatory environment in recent years. For those looking to invest in the buy-to-let sector, experts are clear: demand is not something you’ll likely to have to worry about.