Demand for rental properties has jumped significantly following a turbulent couple of months for the property sector, new research has uncovered. Their popularity has soared after would-be buyers put their plans on hold as mortgage rates spiralled higher than predicted.
The number of people enquiring about rental properties is up 23 per cent compared to the same period a year ago while at the same time the number of smaller rental homes on the market is 4 per cent lower than last year, so availability is limited.
This shift in demand is putting further pressure on an already stock-depleted rental market, with agents saying they are managing 36 enquiries per property on average, with quadruple the number of tenants as rental properties available, leading to record levels of competition between prospective tenants.
Christian Balshen, rental expert at Rightmove, which conducted the research, said: “It’s extremely frustrating for so many people in the rental market right now, with demand so high. Tenants are trying to secure viewings for properties as soon as they hit Rightmove, and the stock shortage means that agents are dealing with an unmanageable number of enquiries. The number of aspiring first-time buyers who have now had to turn to the rental market is exacerbating the situation further.”
In fact, first-time buyers have been hardest hit by recent mortgage rate rises, with many falling back to the rental market as a short-term alternative to paying unattractive mortgage rates.
According to the research, four in ten (42%) first-time buyers still plan to buy in the next few years and have already got their deposits saved, however they are waiting to see if mortgage rates will drop. Indeed, there are signs that mortgage rates and availability are beginning to return to reasonable levels following a turbulent two months, with indications they could fall further next year.
Furthermore, with stamp duty savings guaranteed until 2025 under the new Autumn Budget, the impetus for these ready-to-go first-time buyers to take their first step on the property ladder in the next year or so is high, especially if mortgage rates do drop.
Rightmove’s property expert Tim Bannister, added “If someone has their deposit saved and is ready to move, they may find that right now presents a better opportunity than a few weeks ago, particularly with more choice coming onto the market and some sellers pricing more competitively in the lead up to Christmas.”