Fewer properties is forcing up rents

A recent survey by bridging broker Finbri highlights a significant surge in tenant demand in the private rented sector (PRS), with 71% of landlords reporting higher demand over the past year. This increased demand is driven by a shortage of rental properties, as landlords exit the market and new rental developments fail to keep pace with demand.

Key Findings from the Survey

– **Increased Tenant Demand**: 71% of landlords observed higher tenant demand last year, with 25% noting a significant increase.
– **Shorter Time on Market**: Two-bedroom rental properties are now on the market for an average of 15 days, compared to 25 days pre-pandemic.
– **Regional Variations**:
– **London**: 83% of landlords reported increased demand.
– **South West**: 82% of landlords saw increased demand.
– **Yorkshire and the Humber and Wales**: Demand increased by 67% and 63%, respectively, though these were the lowest among the surveyed regions.

Market Imbalance and Rising Rents

The imbalance between supply and demand is causing rents to rise. The average UK rent has increased by 7.2% to £1,223 per month. The survey indicates that 51% of landlords plan to raise rents to cover additional expenses.

Landlord Responses and Market Exit

Despite the high demand, a significant number of landlords are leaving the market. Last year, 32% of landlords sold at least one rental property. This trend is contributing to the ongoing shortage of available rental properties, further exacerbating the supply-demand imbalance.

Implications

The findings from Finbri’s survey underscore the challenges in the UK rental market, where high tenant demand meets a shrinking supply of rental properties. This dynamic is leading to higher rents and increased competition among tenants. The exit of landlords from the market and insufficient new rental developments are critical issues that need to be addressed to stabilize the market and ensure adequate housing supply for renters.

These trends also highlight the importance of effective policy interventions to balance the interests of landlords and tenants while promoting investment in the rental sector. Addressing the root causes of the supply shortage, such as regulatory and financial barriers to rental property development, could help mitigate the current market pressures.

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