Rents look set to rise as demand outstrips supply

Rental prices in the UK look set to increase as demand for property continue to rise, but the number of homes coming on to the market remains at a historical low.

A new joint report into the letting market by Reapit and Dataloft shows that there are ‘simply not enough properties to meet demand’, placing upward pressure on rental values.

The ‘Residential Real Estate Demand Monitor - Rental’ report, a quarterly analysis of the UK’s residential property rental market which combines data from a representative sample of lettings agency branches across the UK, shows that the letting market is seeing substantial activity with viewings up 13.3% year-on-year and lease signings up 3.5%, while supply has dropped 6.9%. 

Changes to the buy-to-let tax regime are reducing landlords’ profit margins, leaving many with little alternative but to exit the PRS due to the profit squeeze, and this is compounding the supply problem.

Gary Barker, CEO of Reapit, said: “There are strong market indications that upwards of 10% of landlords are actively considering selling their properties. Multiple vendors have reported similar information, and we are actively tracking this phenomenon.

“Our research has uncovered an imminent supply-side squeeze in the rental market. We see strong demand for properties with viewings up 13.3% and lease signings up 3.5% over the year, while overall supply is down 6.9%. Rents are unchanged year on year, but as rental inventory dries up, it’s inevitable that rental prices will increase.

“Landlords deciding to sell their properties will further squeeze the supply-side of the rental market. There are simply not enough properties to meet demand.”

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