Buy-to-let investors in the UK continue to experience extremely high levels of demand for their properties, with new data showing another rise.
For buy-to-let property investors, there are several positive markers right now in the UK housing market, from resilient pricing to mortgage rates finally edging back down after some recent rises.
Alongside this, rental demand – which has remained extremely strong across almost all parts of the country in terms of the number of tenants versus the number of homes available – has once again climbed, according to the latest Housing Insight Report from Propertymark.
The research shows that the average number of new prospective tenants registered at each member branch has risen to 97 in May, up from an average of 90 in April which is around a 7% increase. This, states the report, suggests that tenant demand in the UK buy-to-let sector is on the rise.
At the same time, buy-to-let stock levels have increased to around 11 rental homes available per member branch in May, although this remains within the long-run parameters and still represents a fairly large disparity between tenants seeking homes and properties available.
Buy-to-let landlords get nine tenants per property
On average, Propertymark notes that there are around nine new tenant applicants registered for each available property, as demand continues to outstrip supply.
The number of tenancies agreed per member branch also increased in May to just over eight, having fallen to a lower point over the past few months. This is still down on figures from the middle of last year, when the average hovered at around 11 new tenancy agreements per month per member branch between July and October.
Of course, this all has a knock-on effect on rents, which have already been pushed upwards over the past couple of years partly in response to escalating mortgage rates and changes to the tax rules, which has resulted in some landlords upping rents to cover the costs.
According to Propertymark, rents “continue to fluctuate by market and region”. Almost half (47%) of member branches reported seeing rents remain static this May, while 34% said they had increased overall. But 18% said they had seen rents fall month-on-month, up from 12% who said the same in April.
Rental arrears for buy-to-let landlords remain towards the lower range, despite a slight increase in May, with less than 3% of fully managed and rent collect/rent management properties in arrears.
Looking at the sales market
Buy-to-let property investors will also be keeping a keen eye on the sales market at the moment, particularly as the promise of a future base rate cut along with more positive economic influences looking to boost the housing market – including the buy-to-let space.
Average house prices in the UK increased by £946 in April 2024, according to figures from the government and HM Land Registry, bringing the average to £281,373. Since April last year, prices have risen by £3,121 across the UK.
Commenting on the results from the latest report, Nathan Emerson, Propertymark CEO, commented: While both sectors remain resilient, there is much that the next government can do to support buyers, renters such as improving the home buying/renting process and professionalisation of the sector via the regulation of agents.
“More broadly there is a need for a review of property taxes to make changes which stimulate supply and demand.”
What’s in store for the economy?
Dr Andrew Robert Watson, Propertymark Senior Researcher, said: “The economic outlook is mixed. Although GDP grew by 0.7% in the three months to April 2024, it remained static in April 2024 (the latest figures available). The base rate remains at 5.25% despite inflation (CPI) reaching the Bank of England’s target of 2%.
“The reasons for this are multifaceted and include the pending general election, the speed at which inflation is slowing, and wage growth in the services sector.
“The value of new mortgage commitments increased in Q1, but gross mortgage advances decreased to their lowest levels since Q2 2020. Furthermore, new possession case numbers increased from 1,459 in Q4 2023 to 2,096 in Q1 2024, and the number of adults reporting difficulty in paying their rent or mortgage continues to trend upwards.
“However, good news is on the horizon, with the expectation that inflation concerns are dissipating, and that the base rate will reduce in Q3.”
