Fewer Rental Properties Push Rents Higher

Author: Rent Guarantor

13/01/2020

Average UK rents rose in 2019, as a lack of available properties to satisfy tenant demand pushed them higher. Ongoing Brexit and political uncertainty combined with changing regulations worked to weigh on investor demand for property. However, while tenants will likely face higher rents for some months, research suggests there are signs that Buy-To-Let (BTL) investors are now showing interest in investing anew in the sector.

A lack of new rental properties available in the UK has been a regular fixture throughout 2019. The possibility that property investors and existing portfolio BTL landlords could be seriously considering buying more BTL homes for the UK’s still growing army of tenants, however, is good news – albeit that it should be treated with caution.

Higher rents

According to research from global residential property firm, Hamptons International, the average rent across the UK in November 2019 rose 2.1% from a year earlier. That pushed it up to £989 per calendar month, some £20 more than in November 2018. The property experts said the main driving force behind higher rents was the lack of new rental properties available for tenants to live in.

Looking at rent rises on a regional level, Hamptons rental data shows:

  • Rents rose 4.2% on the year in the South West.
  • Rents were 4.1% higher in the South East.
  • They increased 2.6% in the East of England.
  • In Greater London, average rents gained 1.1%
  • Rents were up just 0.2% in the North.

Indeed, according to its data, there were 7.8% fewer properties available to rent between January and November 2019 compared with the same period in 2018. South West England was the worst hit with 11.7% fewer properties for rent, as more landlords with properties in that region have sold up.

Overall, landlords bought 11% of all properties available for sale in the first 11 months of 2019. While that’s the same proportion as in 2018, its 5% lower than in 2015.

Why landlords might now consider renewed investment

Landlords and property investors faced a number of issues that affected their decisions regarding buying or selling their rental properties. They were:

  • Ongoing uncertainty over Brexit due to the lack of consensus in Parliament.
  • Broader political uncertainty which eventually resulted in a General Election in December.
  • More rental related regulations to adhere to.
  • Increased action being taken against rogue landlords and letting agents.

The first two issues are now much less of a worry; the election result made it clear that Brexit will go ahead and the Conservative party majority will ensure it does so, quickly.

However, regulation remains very much an ongoing issue for property investors and the UK’s landlords. Of course, much of it is being put in place to protect tenants and landlords and according to Hamptons International research, that’s something some landlords are aware of.

Why? Figures show that in November 2019, landlords purchased 12% of all property available for sale that month. That shows that some investors take advantage of the sweet spot we’ve previously identified, where prices are low but tenants demand is high and rents are still rising. It also suggests that with political uncertainty easing, regulatory changes are considered less challenging or much of a deterrent, particularly in the face of a healthy rental market that’s expected to get stronger in the coming years.