The UK rental market has long been a competitive one, but this has only been exacerbated following the Covid-19 pandemic. Renters are no longer just looking for the right property, in the right area and at the right price, they are also looking for space to work remotely thanks to hybrid working being adopted more widely.
This blog post will take a look at the rental market in the UK, assessing where it is now and predicting how it will perform in 2022 in terms of supply, rental growth and the performance of the Build to Rent market.
Supply of rental property
The latest report from the Royal Institute of Chartered Surveyors has identified a disparity between rental supply and demand. For instance, “tenant demand saw another solid monthly increase in November, evidenced by a net balance of +48% of respondents citing a rise” meanwhile “landlord instructions fell according to a net balance of -24% of survey participants.” This looks set to continue as we progress further into 2022, showing it is necessary for the lack of high-quality, affordable rental property to be addressed.
The fallout is that there is a lack of choice for existing renters thinking of relocating, and also for new renters entering the market. However, for landlords and investors with property available in desirable locations it means that rental demand is high, offering solid returns on investment.
Zoopla reported in November 2021 that UK rental growth had hit a 13 year high, and predicted this growth will remain strong with an estimated rise of 4.5% by the end of 2022. The real estate company justifies this by explaining that “the supply shortage coupled with the strength of the employment market which, despite the pandemic, is set to remain robust, will in turn support demand and sustain rental growth.”
Savills supported these findings in its UK Housing Update, revealing that the local authorities to experience the biggest rental growth were Richmondshire (22.9%), Folkestone & Hythe (15.8%) and Torfaen (15.4%). This shows that investors thinking of investing in rental property would do well to turn their attention to regional cities, a strategy which GRE Assets has long-championed.
The rise of the Build to Rent sector
A growing sector in the UK with investment of over £4 billion last year, there were “14,550 BtR completions in 2021, 15% higher than the 2019-21 average.” Buy Association recently reported that investment in the sector could triple in 2022.
The movement of big names into the Build to Rent market is playing a big role in this growth. For instance, Lloyds Banking Group announced in July 2021 that it was entering the private rental market with the launch of it’s Citra Living brand. The first deal following the announcement of it’s fund was acquiring a residential building at Nene Wharf at Fletton Quays in Peterborough, a GRE Assets development.
The Build to Rent market presents a great opportunity for investors and developers to address the challenges in the UK property market with rental supply. Savills supports this explaining that “new rental supply is not plugging the current supply gap and there is considerable scope for investors to deliver Build to Rent across all locations and price points.”
GRE Assets has been delivering high quality, well connected homes in the UK and Spain since 2006.