Great News for Landlords as Demand Outstrips Supply on Property Sales
Landlords should have no problem renting out their property in the current climate as demand for homes has begun to outstrip supply across the country. A well-documented lack of house building has played its part, as well as affordability problems for first-time buyers.
This has pushed many into the rental sector, with estate agents experiencing high volumes of enquiries as soon as a property is placed on the market. This provides fantastic peace of mind for landlords, knowing that long periods of inactivity won’t dent rental income.
Low House building Levels
The construction sector in the UK is stagnating with output slipping by 1.1% between July and September compared to the previous quarter. This has contributed to an increase in demand as more people struggle to find a place on the property ladder.
To amplify the problem, the number of affordable homes built between 2015 and 2016 fell to its lowest level for over two decades. Just 32,100 new-builds were constructed within this period, compared to 66,000 the year before.
The response from the Theresa May government has been to propose vast house building schemes over the next few years. This is further good news for landlords, providing more opportunity to extend their property portfolio when homes are complete.
As some potential sellers are remaining cautious in the current climate, fewer properties are being placed on the market. This shortage of supply, combined with a low ratio of house building, has pushed up prices in various regions of the UK.
This positive trend has been taking place for an extended period now. Average house prices have risen by over 35% since early 2011 with a further increase of around 8% over the last 12 months alone.
During this same period, wages haven’t risen anywhere near these levels which pushes first-time buyers and average earners onto the rental market. This new ‘Generation Rent’ do this reluctantly but have no other option.
In many ways, leaving the EU has created an even more desirable climate for landlords across the UK. The temporary period of uncertainty has seen demand for rental properties increase as prospective sellers sit still on their assets.
With the private rented sector dealing with a 10% rise in enquiries over the last year, rents have increased to around £850 due to sustained demand. Furthermore, tenants are becoming increasingly okay with moving into house or flat-share accommodation to bring down their rental outlay.
Positive Signs for Landlords
The severe lack of supply will see house prices rise and continue to generate a high ratio of people looking to the rental sector. As the government seeks to build more homes across the country to counter this, activity in the market will increase and help landlords extend their portfolio.
The opportunity to own your own home for many Britons is becoming increasingly out of reach. This will boost the buy-to-rent sector, generating increased rental yields and further capital appreciation. Overall, with demand remaining high, landlords are guaranteed a quick let, as well as a good rental income per month.
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