What's happening with the current rental market?

Posted 3 November 2011 by Angie Blunden

The clocks have changed, Autumn is starting to turn into Winter, and we are seeing a strong rental market in the run up to Christmas. Five years ago, the private rental sector accounted for just over a tenth of all homes, it now accounts for nearly a fifth and by 2016 this is expected to rise to a quarter of all homes.

The latest national Consumer Rental Forecast from Rightmove shows the gap between rental demand and supply has widened. Search activity continues to set records, whilst available stock is lower than last quarter as the supply of new rental properties remains muted and tenants stay in properties longer.

This trend of renting for longer is reflected in tenants’ expectations. Two in five tenants expect to rent properties for three years or more, increasing from almost a third a year ago. This highlights the growing reality for many that renting will be their long term living solution rather than a short term accommodation fix.

In terms of rental payments, nationally just over half of all tenants anticipate that their rents will be higher in 12 months time as shown by Rightmove’s latest findings. Buy to let lender Paragon’s research showed 4 out of 10 professional landlords said their rental income had increased during the third quarter of 2011, whilst three quarters of smaller scale landlords reported little change in their rental income.

On average, Paragon found the overall increase for all landlords was 1% and the average rent in September stood at £718 pcm, a rise of 0.7% across England and Wales for September. The Buy to Let Index showed the average rent to be £27 pcm higher than in August 2010. 

Going into 2012 it seems that across the UK the rental market will remain strong, as many buyers are still struggling to get on the property ladder due to the challenge of raising large deposits and lenders maintaining their strict lending criteria. 

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