New data from Propertymark’s Housing Insight report indicates that the number of people seeking rental properties is skyrocketing, but the supply of available rentals isn’t keeping up. A substantial 52% of letting agents have reported a month-on-month increase in rents, underscoring the demand pressure.

In a nutshell:

• Rising rents: Over half of the letting agents observed an increase in rents from one month to the next.
• Stable availability: The average number of rental properties per branch has remained consistent, standing at 11 properties in September, similar to August numbers.

Despite some fluctuations in recent months, the core trend remains: the demand for rental properties is exceeding the supply.

Why Are Landlords Hesitant?

The underlying reasons for the supply-demand imbalance are multi-faceted. Nathan Emerson, CEO of Propertymark, highlighted that legislative changes might be one of the culprits.

“Governments across the UK continue to adjust legislation, often making it less appealing for landlords. As a result, we’re seeing a squeeze with more tenant applications than available properties. Rent prices are certainly feeling the pressure, though there might be some easing compared to previous months.”

Financial Strains and Market Volatility

Rental arrears, or overdue rent payments, have seen some movement, oscillating between 2% and 4% over the past year. Currently, 3% of renters are in arrears, which points to some financial strain amongst tenants.

Moreover, the larger economic backdrop is adding to the complexity:

• Economic pressure: Persistent high inflation and interest rates are creating challenging market conditions.
• Sales under asking price: A significant 76% of properties are being sold below their listed price.
• Reduced properties for sale: September 2023 saw a 14% decline in the number of properties available for purchase.

Mr. Emerson emphasised the overarching sentiment of uncertainty that seems to be clouding the UK housing market.

“The whole UK economy and housing market are filled with uncertainty right now. While the decision to maintain interest rates in September was a positive, it’s only a short-term relief, especially for those considering refinancing or entering the property market with a mortgage. We’ve noticed a dip in property availability this September, and it mirrors the current market uncertainty. However, we’re hopeful that things might stabilize soon.”