Spring Lettings Market Update

We are quickly approaching peak lettings season and there are certainly signs of a ‘normal’ summer market. Although, similarly to ‘the pandemic’ years, this year is set to have its own nuances.

As we approach the summer months, we have seen an increase in property coming to the market. The level of available properties to rent is circa. 40% higher than same period last year – and whilst this is good news, we have to be reminded that levels are still significantly down on 2020, by almost 60%.

It is also important to note that even with this ‘increased’ supply of property, demand has held too, and we continue to register an average of 9 applicants for each new property that we bring to the lettings market.

So, what does this mean?

The relative shortage of supply still means that rent levels are elevated, and whilst the increases have settled, they remain high.

High rents are making it challenging for current tenants to move, because it is likely that their current tenancy has been agreed at a lower rate than a comparable property in today’s market. Therefore, many tenants are choosing to stay put and avoid the gamble that is the open market – in which we are still seeing multiple offers, particularly for the most desirable properties. As a result we are seeing a record high level of renewals, with over 85% of renewals including a rent increase in order to bring them more in line with current market conditions.

The combination of tenants staying put, coupled with fewer landlords entering the market or buying additional properties, as well as a reduction of new properties being built, will continue to reduce property stock levels and drive the pressure upwards on rents.

On the other side of the coin we have tenants looking to tighten their belts and reduce, or control their financial outgoings due to the increases in the cost of living. We are witnessing both individual and corporate clients taking a more cautious approach to rent budgeting.

Recommendations for landlords

Ensure your property is well presented, and is marketed to suitable applicants. Each property is competing with more than it would have this time last year (though less than previous years). Even some of the ‘strongest’ tenants are holding firm on their budgets, and so we would encourage you to be competitive with asking prices.

Whilst the lack of demand is driving rents up, the cost of living is supressing them, so finding the ‘sweet spot’ is somewhat of a science at the moment.

Even though there are various legislative and tax related changes impacting landlords, some of which are still to be confirmed, we continue to see landlords entering the market – albeit at a slower rate than past years – who are achieving yield levels on both long and short lets that we haven’t seen for many years.

It is useful to be aware that the coming changes with the Renters (Reform) Bill will are designed to quickly regain possession where a tenant is in breach of their agreement (including rent arrears and anti-social behaviour). It is also understood that you will continue to be able to sell, or move into your property if needed.

Advice for tenants

First and foremost, it is good news that there are more homes coming to the market, however I’d suggest an air of caution with how much comfort you take in this. Tenants who are securing the best properties right now are continuing to offer asking price or higher, meaning rents remain incredibly competitive.

The best thing you can do to secure a property is to prepare. Prepare your documents, your references, your finances, and importantly yourself to be ready to make a decision quickly when it comes to what you will compromise on and what your absolute ‘must haves’ are.

Currently, very few potential tenants will have the luxury of seeing multiple properties and considering them thoroughly before placing an offer. When pitching an offer, it is important that you put your best foot forward and offer strong, it’s unlikely you’ll be about revisit your offer.

And whilst we await further granular detail of the Renters (Reform) Bill, a key change includes the end of ‘no-fault evictions’ – in our experience, tenancies that are ended in this way represent a small minority.