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Property Investment

Rents Hit Record High – How Much Should You Be Charging?

Are you charging the current market rate for your buy-to-let properties? Competition among tenants to secure a property has driven rents to new, record highs new research has revealed, meaning now might be the time to review your tenant fees.

The new data shows that national average asking rents outside London have hit a new record high of £1,162pcm jumping by more than 3 per cent this quarter (+3.2%), a rise this size has only been recorded on two other occasions.

Average London rents have also risen 16.1 per cent, reaching £2,343 PCM, the biggest annual percentage jump of any region on record.

In London, the number of new properties becoming available to rent is down by 24 per cent on last year, while every other region and country in Great Britain has seen a jump in new properties to rent, most significantly in the South West (+19%), Yorkshire & The Humber (+12%) and Wales (+10%). However, demand still far outweighs the number of homes available to rent.

In fact, tenant demand is up a record 20 per cent compared with last year while available properties to rent are down 9 per cent.

Tim Bannister Director of Property Science at Rightmove, which conducted the research, commented: “It’s a real challenge for renters at the moment, as there are simply not enough homes available to rent to meet the demand from people enquiring. Ultimately the gap between supply and demand is becoming wider across the board.”

The research has also revealed that studio flats have overtaken one-bedroom flats as the most in-demand flat type for renters. The figures show that there are now four times as many tenants looking for a studio flat as there are studio flats available, a 71 per cent increase on a year ago.

Agents suggest that stretched budgets and the returning popularity of city centres are contributing to this shift. John O’Malley, CEO at Pacitti Jones, Glasgow, said: “The desire to return to the city centre has never been more apparent and the exceptionally high demand we now experience for properties in these locations is case in point. In essence, younger professionals want the same things as they always wanted – to go out and have a good time – and this means being back in the heart of our cities and enjoying the social amenities available.

“It’s not just the younger generation looking to live in vibrant city centre locations. The dramatic rise in the cost of living means that we are now starting to see older people downsizing to apartments to reduce household bills – and being centrally located they will also reduce travel expenses.  And this is something we expect to see more of.”

Furthermore, the recent jump in mortgage rates for new first-time buyers is forcing some to stay renting for longer, placing additional pressure on the number of available properties to rent.

Rightmove’s Tim Bannister commented: “Those looking to rent a smaller property in the next few months may find that they face some added competition from would-be first-time buyers, who have had their purchase plans scuppered for now due to the sudden rise in mortgage interest rates, and are now looking to rent.”

London letting agent Tim Hassell, Director at Draker Lettings in London spoke of the strong demand in the Capital: “Within a few hours of a property going live, we are receiving dozens of enquiries which, when compared to the pre-Covid market, is extreme. Previously we would receive between 5-10 enquiries in the first 48 hours and now we are receiving 30-40 in the same time frame. This has also resulted in multiple offers from tenants who are competing by paying over the asking price and offering significant funds up front.”

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Alex Wright, Editor