As the year draws to a close and the challenge of the pandemic continues, landlords might well be questioning whether further investment in the rental market is a sensible option. The results of Belvoir’s Q2 survey of a cross section of franchised offices from across the UK could well aid the decision-making process. The first key takeaway of Belvoir’s survey is that not a single Belvoir office reported a decrease in rents in Q2. Furthermore, an overwhelming 95% reported an increase in rents. Stock shortages are high in most areas, and tenant demand shows no sign of slowing down. Sounds interesting? Read on…
The second key takeaway from the survey is that no Belvoir offices forecast a decrease in rents in Q3. In fact, the majority (61%), of Belvoir offices surveyed forecast rental increases in areas that included Wembley, Harlow, Swale, Stone, Telford, Shrewsbury, Cardiff and Pontypridd, Paisley, the South West, Yorkshire, the North East, most of the East Midlands and the North West. Offices in Peterborough, Nottingham, Derby West, Burton, Sidcup, Bolton, Leamington Spa, Stoke on Trent, Tamworth, Bangor, Edinburgh and most of the South East are predicting that rents in their areas will remain static.
Franchisees in Scotland, Wales and Northern Ireland paint a similar picture.
Denise Paisley, Director of Belvoir Paisley confirms increased rents for houses and flats during Q2 2021, with demand increasing for houses, but demand remaining unchanged for flats. With stock shortages of all types and sizes of property Denise predicts that both demand and rents will increase in Q3. Belvoir’s Edinburgh office reports increased rents and tenant demand across the board in Q3 with no change in rents or demand. Edinburgh is experiencing a shortage of room rents, three, four and five bed detached houses, with an over-supply of one/two bed flats.
Over in Wales, Rob Price from Belvoir Cardiff and Pontypridd confirms that rents and tenant demand increased for every property type during Q2 2021. Flat and house rents are predicted to continue increasing in Q3, with room rents remain static.
Rob reports a shortage of properties of all sizes and types, with many tenants adopting a cautious approach and remaining in properties for longer. Equally, the last 18 months have prevented many investors from entering the rental market in this area. As a result, there are insufficient homes to meet the incredible number of enquiries and applications for each rental property.
Jackie Burns in the Belvoir Bangor office says that rents and tenant demand increased across the board during Q2 2021. She predicts that over the next quarter, rents and demand are likely to remain unchanged for all properties. Bangor has a supply shortage of all types and size of property.
Having established that there is a shortage of all types of stock in most areas, the next key takeaway is what agents are most short of compared to tenant demand. The survey revealed that two, three and four bed houses were most in demand in Q2 2021. Where there was an oversupply of property, it was predominantly for flats and room rents.
Two beds are the most oversupplied types of property, followed by room rents, one bed flats and studios and then one and two bed flats, five+ bed homes and studios.
Perhaps one of the reasons for short supply is that tenants are choosing to remain in properties for longer. For example:
• 39% of tenants are staying for 13-18 months
• Just over 29% prefer a tenancy of 19-24 months
• 27% of tenants rent for over 24 months
• Just under 2.5% of tenants choose to stay for less than one year.
Rent arrears are a huge concern for landlords, but almost half of Belvoir offices reported that less than three tenants were in arrears in Q2. This was an increase when compared to Q1 21 and all of 2020, but just under 32% of offices reported 4-10 tenants in rent arrears – a decrease compared to Q1 21 and 2020. Around 63.5% of offices carried out no evictions – a decrease compared to Q1 21 and all of 2020.
Belvoir’s Q2 rental survey certainly confirms how buoyant the rental market is. If you are interested in finding out more about Buy to Let investment you can seek free professional advice from your local Belvoir office visit belvoir.co.uk/offices.