Demand for UK rental homes jumps, easing pace of rate hikes
LONDON: The United Kingdom saw the highest annual jump in rental homes on the market in over seven years last month, led by a long-awaited boost in supply in London.

There were 34% more rental homes available in the United Kingdom in January compared with the same month a year earlier, helped by supply in London rising 61% in the same period, according to Hamptons International data.

That’s as the average rent on a newly let property in the United Kingdom rose 8.3% year-on-year, the slowest pace in 13 months.

“Last summer looks like it may have been the high watermark for rental growth,” Aneisha Beveridge, head of research at Hamptons, said in a report.

“Higher rents coupled with higher prices more generally have placed an increasingly tight straitjacket around tenants’s finances, curtailing their ability to pay more.”

The post-pandemic return to London caused demand for rental homes to surge, giving buy-to-let investors the power to haggle for higher rents.

Competition was so fierce that in some circumstances, prospective tenants were writing personal statements and offering well over the asking rent to secure a home.

A pause in the Bank of England’s rapid rate hikes has since eased the pressure on landlords, whose interest-only mortgages are particularly exposed to monetary tightening.

In January, some 59% of landlords in the United Kingdom achieved a higher rent when a new tenant moved in, down from 79% a year earlier.

“I don’t think London will ever see that extreme increase in rents again,” Guy Gittins, chief executive officer of Foxtons Group Plc, London’s biggest broker, said in an interview.

Still, Hamptons warned rental growth will remain “stubbornly sticky” this year as tougher regulation reduces the number of new landlords entering the market.

There are still 43% fewer homes available to rent now than there were in 2019, and present stock levels are unlikely to recover to anywheer near pre-pandemic levels in the foreseeable future, the report said.

What’s more, construction starts in the build-to-rent sector, widely tipped to help cover the shortfall of new buy-to-let investors, are also in decline, according to broker Savills Plc.

The drop in rental homes available during a surge in demand post-Covid was the largest since Hamptons’ records began, meaning the current supply bounce started from a low base.

“Reduced returns coupled with the additional time and financial costs stemming from rental reform have squeezed the numbers of new landlords,” Hamptons’ Beveridge said.

“This looks set to keep rental growth running ahead of inflation this year.” — Bloomberg
Property
LONDON: The United Kingdom saw the highest annual jump in rental homes on the market in over seven years last month, led by a long-awaited boost in supply in London.