Rents Rise as Detached Properties Retain Popularity Despite Low Supply
Two separate reports show that rents have risen in recent months as demand for property in the lettings market remains high. The data suggests the recovery in demand for rental homes has continued over the third quarter of the year with one stating it expects demand to remain strong and push rents higher.
According to the Deposit Protection Services' (DPS) third quarter 2021 rental report, demand for detached properties remains upbeat, lifting average rents across the sector. Meanwhile, the Royal Institution of Chartered Surveyors (RICS) said demand for property to let continues to outstrip supply which will push rents higher over the remainder of the year.
Detached Homes See Fastest Rent Rise
The latest quarterly rental report from DPS shows that even though coronavirus restrictions have been removed and the economy is progressing more ‘normally’, tenants are still keen on having their own space. As such, demand for detached rental properties has remained strong and pushed rents higher both on a quarterly and year-on-year basis.
The third quarter 2021 survey reports that the average rent across the whole market was 1.74% higher than in Q221 at £818 per month. However, the average rental increase for a detached property was 3.52% over the same period for an average rent of £1,117. The rent compared with Q320, meanwhile, has also risen strongly in the detached homes rental market - by 8.87%. However, at the same time, the supply of detached rental homes has fallen by 17%.
The report also showed that compared with Q221, terraced homes experienced the smallest rise in average rents of 1.15%. Rents for semi-detached properties increased by 1.95%, while average rents for flats was up 2.22%, reflecting an increase in demand for smaller city homes.
“Despite the roll-out of the coronavirus vaccination programme and the lifting of lockdowns, it seems that tenants are still prioritising more living space and are willing to pay for it,” said the DPS’ Managing Director Matt Trevett.
Demand for Properties to Let Outstripping Supply
Further underscoring the height of demand for the UK’s lettings sector is the latest RICS report covering activity in September. The respected survey measuring sentiment across the UK’s housing sales and rental market showed that yet again demand for rental properties from tenants outstripped supply of homes to let. A balance of +62% more agents reporting higher demand from people looking for a rental property (much higher than the long running average of +19) compares with a balance of -21% in new instructions from landlords.
The mismatch between supply and demand of property to let has been noted in recent months during 2021, and suggests rents will continue to rise over the remainder of the year at least, the industry body said.
Further upward pressure on rents has different implications for tenants and investors. For tenants any further gains in average rents could help to dampen demand as they opt to stay in place rather than pay a higher monthly charge to move home. However, the ability to secure a higher monthly rent could encourage more landlords to remain in the lettings sector and even encourage new investors to the market.
However, even though higher rents and strong tenant demand could prove positive in the future, right now it’s a difficult market for tenants looking for the right rental home at the best price.