According to our latest rental indices for 2021, in the first Quarter we saw rents being flat to slightly falling year on year – on a UK basis. This was mostly due to the comparison to the previous year when Covid was only just starting to become news, as opposed to the third lockdown we experienced at the start of this year.
The data suggests that the fall is minimal, with all Belvoir offices across England, Wales and Scotland showing the average rent recorded for Q1 2021 as £809 per month, which was just 1% lower than Q1 2020. Considering the huge impact of the pandemic on the economy, it’s pretty incredible how rents have held up during this time.
This is reinforced by looking at the data for Q2 2021 which showed far more positive results pretty much everywhere across the country as demand seems to be seriously outstripping supply. In the second quarter, when we compared a more open market versus the first lockdown, rents rose by 1.25% and when comparing the Q2 2021 average rent of £810 to the average rent for the whole of 2020, there was a slightly bigger year on year increase of 1.5%.
Although as anyone that invests in different parts of the country knows, the trends differ depending on the area and indeed the property type.
Houses remain in short supply and high demand
Looking at the Q2 results in 2021, 5% of surveyed Belvoir offices suggested prices for flats decreased (16% in Q2 2020), 12% saw flats rents staying the same (37% in Q2 2020), while 83% saw an increase (just 47% in Q2 2020).
For houses, the picture was stronger for rents with no offices reporting falls in Q2 2021, 5% staying the same and the majority – 95% increasing. In contrast, in 2020, a similar percentage of offices (7%) saw rents fall, 26% stayed the same while 67% saw an increase, so overall, rents for houses remained strong throughout the pandemic and are now increasing pretty much everywhere.
Although houses outperforming flats from a rental and price perspective is a trend we have reported on prior to the pandemic, there is no doubt that Covid has exacerbated it, not just in the rental market, but the buying/selling market too.
How do rental trends differ around the country?
We survey a selection of Belvoir offices to find out what’s happening ‘on the ground’ to demand and supply as well as rents. This is really helpful to existing landlords and investors to understand the direction of travel of their local area, but also for new investors, especially those looking to invest in an area they don’t know. Whether you are local or from outside the area, contact your local Belvoir office for great advice on buy to let and where and what to invest in locally.
Here’s this quarter’s selection of feedback from offices, but don’t forget there are over 40 individual town and city reports from Belvoir experts in our latest rental index!
Although rents in Q2 are up year on year, on average, in London it’s been a bit of a bumpy ride, however it appears the corner has been turned. Nick Kirby, who is based in Wembley, confirms static rents and demand for all properties during Q2 2021. However, he predicts in Q3 that both rents and tenant demand are likely to increase for all properties. And for those looking to buy, Wembley currently has an over-supply of two bed flats.
For more detailed reports from offices in London, including: Sidcup, please refer to the full report.
Moving to the Midlands, the Leamington Spa office run by John Warburton explained that both house and flat rents remained unchanged during Q2 2021. One change they are seeing is more call for two bed properties due to people now sharing, which has resulted in a slight rent increase. Overall, John reports there has not been a huge amount of movement in the area due to lockdown/Covid. Tenant demand for flats decreased, increased for houses and remained stable for HMOs. As elsewhere, tenants are looking to rent where they have gardens/outside space. Looking to Q3 2021, rents for flats and room rents are predicted to stay the same with house rents increasing. Demand is likely to increase across the board as there is a ‘super-lab’ opening in the area.
For more detailed reports from offices in the West Midlands, including: Stoke on Trent, Stone, Tamworth, Telford and Shrewsbury, please read the full report.
In the East rather than West Midlands, Alison Emms from Newark explains that in Q2 2021, a lack of supply and high demand is causing large increases in all rents for both flats and houses, and this trend is likely to continue during Q3 2021. Newark mainly has a shortage of two and three bed houses to rent.
For more detailed reports from offices in the East Midlands, including: Melton Mowbray, Long Eaton, Milton Keynes, Nottingham, Boston, Derby West and Burton, please refer to the full report.
Heading further ‘up north’ to Chester, Gordon Rogers says that rents are static for flats in Q2 2021, but houses in general have seen an increase. Both rents and tenant demand are expected to continue rising over the coming quarter for all properties.
For more detailed reports from offices in the North West, including: Bolton, Warrington and Burnley, please refer to the full report.
Further south, in Tunbridge Wells, Natalie Boardman reports all house rents increased by around 20%, while flat rents rose by 10% during Q2 2021. This is quite rare versus other areas, mostly rents only increase or decrease around 4/5% in our experience of running the Index. However, Natalie goes onto say that rents are predicted to remain unchanged over the coming quarter as they are already high, and further increases are not sustainable. Tenant demand for flats is also likely to remain unchanged but decrease for houses as demand for family homes may ease slightly now the SDLT holiday has passed, and those who needed a rental are now in one. In addition, as hospitality fully opens, more jobs will keep demand for smaller properties at the same level. Natalie confirmed low stock across the board.
For more detailed reports from offices in the South East, including: Andover, Southampton, Tadley, Haywards Heath, Thanet, Harlow and Swale, please read the full report.
And for those investing across the border, Rob Price from Cardiff and Pontypridd confirmed rents and tenant demand increased for every property type during Q2 2021. Flat and house rents are predicted to continue increasing over the coming quarter, with room rents remaining static, but demand increasing across the board. There is a shortage of most types and size of property, and Rob also confirmed, that this year many tenants have taken a cautious approach and remained at rental properties longer.
So, from a rental perspective, we can see that rental trends are, in the main, either pretty positive or predicted to increase in Q3 2021.
PRS fundamentals stay incredibly strong throughout the pandemic
Although it’s essential to understand what’s happened to rents during the pandemic, it’s also worth knowing if any of the key trends for landlords and tenants have changed too.
Firstly, we looked at whether tenants were more or less likely to ‘stay put’ during and post the pandemic. Not surprisingly, many tenants decided – or had to – stay put during the pandemic, and our stats show slightly less people were staying for less than a year and more staying for over 12-24 months. However, as we move out of lockdown during Quarter 2 2021, it appears that tenant trends are returning to normal.
Secondly, we considered whether landlords are more likely to experience void periods, but found there wasn’t much change throughout the pandemic and currently, void periods tend to be two weeks or less.
Although there is much talk of rent arrears in the press and we did see some increases in rental arrears, most tenants have continued to pay and in Quarter 2 2021, the offices surveyed tend to have either no rent arrears or less than three properties per branch with an issue.
One of the key benefits of working with a quality agent like Belvoir is whether you are a tenant or landlord, the chances of an eviction are always very low and although evictions rates fell to almost zero during the pandemic, once the rules were relaxed, most offices starting evictions again are still only evicting two or three tenants per branch.
Finally, we asked franchise owners whether landlords had been more or less likely to buy and sell property which would affect future stock levels. Overall, we didn’t see a big uptick in landlords selling up, but we did see some landlords holding off during the start of lockdown whereas so far this year, we’ve seen more landlords come back into the market.
So, although the pandemic has had a devastating impact on many markets and people across the UK, overall, the private rented sector, including both tenants and landlords has survived incredibly well, suggesting that buy to let remains a good investment into the future.