As a raft of data is now emerging from Q2 2021, it’s only natural to compare this to conditions in Q2 2020 when the initial lockdown was in full effect. For those operating in and around the housing/mortgage market, we all realise how fortunate we have been over this period. After a breathless 12 months or so across the industry, we are still seeing house prices rise and the proportion of landlords reporting increasing tenant demand has hit a five-year high. Factors that really demonstrate the scale of this progression, even during such challenging times for many.
Focusing on the BTL market, this five-year high emerged in research from Paragon Bank which found that just under 39% of landlords have seen increased tenant demand over the past three months, with 18.2% saying it has grown ‘significantly’ and a further 20.3% reporting slight increases. The percentage of landlords seeing growing demand has risen by 8% since the prior quarter and there’s a continuing trend of increasing tenant demand in the form of a 25% year-on-year rise. Additionally, there was a 2% decrease in the proportion of landlords reporting a fall in tenant demand compared to Q1 2021.
When looking at this from a regional perspective, Yorkshire and The Humber saw the biggest rises after 65% of landlords reported increased tenant demand, 28% significantly and 37% slightly. This was closely followed by Wales and the South West where a net increase in tenant demand over the past three months was reported by 64% and 63% of landlords respectively.
It's been interesting to chart the impact of the pandemic on urban areas where room rentals represent an important element within the wider rental marketplace and, with restrictions bring lifted across the UK, this leads to the question: does a return to city life now seem more appealing?
SpareRoom’s Quarterly Rental Index – an overview of how the room rental market is performing across the country – outlined that Q2 2021 saw interest pick up in the capital, with demand vs supply up 71% year-on-year across the city. While West Central London may have seen the biggest regional drops in rent, it also experienced the biggest increase in demand vs supply (up 191% year-on-year), followed by East Central (up 133%) and South-West (up 98%).
Across all UK regions, East Midlands, South West, Wales and Yorkshire & Humberside saw the biggest increase in room rents, all up 3%. In fact, the only regions outside London where rents fell were Northern Ireland (-2%) and West
Midlands (-1%). Within the UK’s 50 largest towns and cities, Birmingham experienced a significant decrease in rents (-6%), followed by Middlesbrough (-3%), whilst Dundee and Peterborough saw the biggest increases, both up 9% year-on-year.
In recent years, many landlords have moved away from standard single-family dwellings, due to the attraction of higher-yielding urban HMO and multi-unit options. This demand may have tempered over the past 12 to 18 months but as the urban pull strengthens, so too might the appeal for landlords to bolster their portfolios accordingly. And this is a trend that will be worth following over the rest of 2021.
