TENANT DEMAND SHOWS FURTHER INCREASE

One of the most positive stories to hit the buy-to-let sector in recent weeks centred around tenant demand hitting an all-time high in Q3. This headline emerged in research from Paragon Bank which outlined that almost seven in 10 (69%) landlords said they had seen demand grow in Q3 – the record high – with 36% describing this happening to a ‘significant’ level.

URBAN VS RURAL RENTALS – A DISTRIBUTION SHIFT

One of the most noteworthy effects of the pandemic on the rental market has been the shift in the distribution of available properties between urban and suburban areas.

According to Rightmove, the imbalance of supply and demand for rental properties in these areas has led to an 11% rise in asking rents compared to pre-pandemic levels. The average asking rent in suburban areas across Great Britain is now suggested to be £1,041 per calendar month, up from £940 in February 2020. In rural areas, rents have jumped from £1,141 per calendar month to a current level of £1,264. Urban rents are up by just £25 over the same time period, from £1,347 to £1,372.

THE PANDEMIC-INDUCED SHIFTS RESHAPING THE BTL MARKET

As activity levels continue to slow down a little, there is an opportunity to reflect on the past 12 to 18 months and identify changes in tenant demand and landlord behaviour to build a better picture of the BTL sector moving forward. With this in mind, some enlightening research emerged from Goodlord and Vouch to reveal which pandemic-induced shifts have proved short-term, and what market movements look set to reshape the industry permanently.

The report, which also includes insights from some key industry figures, cited sustained optimism throughout the industry with growing levels of positive sentiment being demonstrated amongst letting agents and landlords. Although challenges were still evident.

THE BTL HEATWAVE CONTINUES

It’s been a busy summer across the buy-to-let marketplace. An array of landlords remain well placed to benefit from some highly favourable conditions as competition heats up across the lending arena, rental income is strong and a lack of good quality stock continues to fuel demand. Another important factor within this is improving rental voids and this trend was evident in recent data from Goodlord.

This outlined that the North West saw the biggest month-on-month decrease in void periods in August, with its average dropping from 20 days in July to 18 in August – a decrease of 10%. London and the East Midlands also saw their average void period reduce in August, by one day.

RENTAL ARREARS ON THE DECLINE

It’s no secret that the pandemic has impacted landlords and tenants in many different ways. From a financial perspective, it has placed additional pressure on a variety of businesses and personal incomes. As such, it’s important to chart these personal journeys and form a better understanding of how such entities are coping.

TENANT DEMAND HITS RECORD HIGH

The proportion of landlords reporting increasing tenant demand has hit its highest level since 2016.

Research from Paragon Bank found that just under 39% of landlords have seen increased tenant demand over the past three months, with 18.2% saying it has grown ‘significantly’ and a further 20.3% reporting slight increases. The percentage of landlords seeing growing demand has risen by 8% since the prior quarter and there’s a continuing trend of increasing tenant demand in the form of a 25% rise year-on-year. Additionally, there was a 2% decrease in the proportion of landlords reporting a fall in tenant demand compared to Q1 2021.

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