At the end of last year, Belvoir’s Q3 rental index revealed the highest rental increases since records began in 2008. But what lies ahead for the market in 2022? Read on to find out more…
“Most of Belvoir’s offices operate outside the London area, and bearing this in mind, those Belvoir offices that have been trading since 2008 in England, Scotland and Wales were reporting average advertised monthly rents of £817 in Q3,” says Dorian Gonsalves, CEO of Belvoir.
“Compared to Q3 2020 this represents a large year on year increase of just under 9.5% and an 8% increase when compared to Q3 2019. Furthermore, the majority of Belvoir’s franchisees are predicting that rents are likely to stay the same or will continue to rise in 2022.
Belvoir’s figures are comparable with data from other sources, with the property portal website Zoopla recently reporting the strongest rental growth in 13 years. When you consider that rents do not typically rise or fall by more than +/-4%, these really are staggering figures.
“Belvoir’s offices are experiencing regional variations in rents; for example, our statistics revealed monthly rents ranging from £573 in the North East, £676 in the North West, £759 in the South West, through to £1,161 in the South East and £1,585 in London.
In the South East rents were quite stable in Q3 – even low compared to the previous year – however supply was extremely tight, especially in areas where people were moving from London, and this is placing enormous upward pressure on rents.
Our Belvoir Southampton office reported that the limited supply of flats in their area had forced rents up by 15%, and in some instances tenants have been offering to pay over the asking price in order to secure a property. Over in Tunbridge Wells tenant demand increased for all properties with people moving to the area from London.
As a consequence, rents for flats increased significantly across the board, with house rents increasing by as much as 25%.
“Looking ahead to the rest of 2022 and beyond – Belvoir’s franchisees across the country are predicting that rental increases are likely to continue.
“A cross-section survey of franchisees across the Belvoir network reveals that tenant demand is extremely high, but half of our offices are currently experiencing a shortage in all types of properties, from one bed flats up to five-bedroom homes and there is little indication of any easing in the shortage of available properties.
“As the market continues to adjust following earlier lockdowns, tenant trends appear to have changed slightly, in that fewer are staying for less than a year, and the most popular length of stay remains 19-24 months.
“Belvoir’s data suggests that although slightly more landlords are not buying new properties to add to their portfolio, there was a slight increase in both those buying three or more and for those buying six or more or 11 or more.
“Despite everything that landlords have had to endure in recent years, there we have seen no evidence of a mass exodus from the sector. The English Housing Survey reveals that BTL grew significantly between 2002 -2016, more than doubling in size to 20%, falling slightly to 19% in 2016.
“The market has remained at this level ever since. This is a good indication that despite everything thrown at landlords they have not left the sector, but new landlords have been discouraged from introducing new properties to the market, which means there is inevitably less availability of properties for tenants.
“Belvoir is predicting that rental inflation will continue to increase at 8-10% for the rest of this year and are only likely to return to lower levels when more landlords feel confident about introducing further properties into the sector.
“We strongly recommend that landlords consider using the services of a reputable, professional property management agent to help them secure the best tenants for their property, to maximise the potential of their investments and to help ensure that they are keeping up to date with government policies.”
To review all of Belvoir’s rental indexes in full visit: https://www.belvoir.co.uk/rental-index/