For property investors, seeking out areas where demand is high and supply is low offers a significant advantage when it comes to attracting prospective tenants to your rental property. With Spring just around the corner, 2020 has already offered some record numbers when it comes to rental demand.
No matter if you are an established property investor or someone taking the plunge to becoming a landlord for the first time, one of the key components of a successful investment strategy is filling your property quickly; minimising void periods.
Investing in low-demand areas (be it through less desirable features compared to neighbouring areas, detrimental environmental occurrences, crime or poor investment pledges) means that you are more likely to experience pro-longed void periods.
However, despite now only being three months into the beginning of a new decade, the tide appears to be turning when it comes to rental demand according to ARLA Propertymark.
January saw a record high of demand for rental properties across the country. In a report issued by the awarding body, demand for rental accommodation reached an average of 88 prospective tenants registering per ARLA member branch; rising from 56 the previous month.
This means that ARLA registered agents across the country (including us) have witnessed a 57 per cent increase in the number of prospective tenants registered since December. Year-on-year, demand for rental accommodation has increased by a fifth (21 per cent), rising from 73 registered applicants in January 2019 to 88 this year.
The increase in demand has consequentially seen a rise in rental figures in areas of the country. The number of tenants experiencing rent increases rose in January, with 42 per cent of letting agents witnessing landlords increasing them, compared to 32 per cent in December last year.
Year-on-year, this figure is up from 26 per cent in January 2019, and 19 per cent in January 2018, as seen below:
The lack of supply has seen some agents report deductions in their managed stock, with the average number of properties managed per branch falling from 206 in December to 191 in January. Rental supply has not been this low since July last year when it stood at 184 on average per branch. Year-on-year supply is down from 197 in January 2019, but up from 184 in January 2018.
In a comment, David Cox, ARLA Propertymark Chief Executive said: “This month’s results are a huge blow for tenants”.
“With demand increasing by more than half, but rental supply falling, rent costs are unsurprisingly being pushed up. Our recent research found that tenants could miss out on nearly half a million properties as more landlords exit the traditional private rented sector and turn towards short-term lets which will only serve to worsen the problem for those seeking longer term rental accommodation”.
“With the Spring Budget around the corner, it’s important that the Government works to make the private rented sector attractive to landlords again, rather than introducing complex legislation which ultimately squeezes the sector and leaves tenants worse off”.
It is now more important than ever for the Government to work alongside landlords and letting agents to ensure that renting remains a viable option; both to the landlords who let the properties but also to tenants who are unable to afford the ‘affordable’ homes that are cropping up across the country.
For more information on how to meet the rental demands across Greater Manchester, whilst harnessing the full power of your portfolio with effective and transparent property management, give Abode a call on 0161 883 2525.