A recent survey conducted on behalf of Paragon Bank shows that tenant demand reported by landlords is at an all-time high. Out of the 700 UK landlords surveyed, 67% experienced increased demand during the first quarter of the year, up from 65% in the last quarter of 2022.
Record-breaking average rents have very much become the norm in the UK. Fierce competition and an undersupply of rental properties are pushing rent prices through the roof. In the first three months of the year, the average monthly rent in London hit £2,500 for the first time ever according to online property portal, Rightmove. Elsewhere in the UK, tenants are forking out a record-breaking £1,190 per month for the average rental home.
Whilst there is some regional variation in price changes, it seems that rents are rising across the large majority of the country. A hefty 85% of landlords across the UK reported rising rents in the areas where they let property.
Significant increases in rent prices were noted by 44% of respondents, up from 39% in the previous quarter. This is the highest proportion since market researcher, BVA BDRC, first started recording the data in 2011.
The survey also asked landlords about whether they themselves intended to increase their rates. Over half (52%) of respondents revealed plans to raise rents within the next six months, with an 8.2% average planned rent increase.
Soaring inflation and a rising cost of living is the main driver behind rising rents in the UK. When asked for the reasons behind rate hikes, 73% of landlords named the increased cost of running a property. Additionally, 60% of landlords wanted to align with local market rates, and 49% were driven by increased mortgage finance costs.
Today, it was announced that the Bank of England has raised the interest rate by 0.25 percentage points to 4.5 per cent. It is the 12th consecutive hike made by the BoE in a bid to curb rampant inflation. The consumer prices index (CPI) was recorded at 10.1% in March, making it the only country in Western Europe with double-digit inflation.
The BoE’s latest interest rate hike increases borrowing costs for households. This will continue to squeeze the pockets of homeowners and put further pressure on buy-to-let landlords to raise rents.
Moreover, with a lack of affordable mortgage deals on the market, many would-be homeowners will continue to rent because they cannot afford to break onto the property ladder. This will keep tenant demand high and continue to fuel the UK’s supply and demand imbalance.
Contact us today for available UK properties.
