No signs of autumn slowdown as rents and tenancies soar

National average rents break records yet again, increasing 4% on the month and 11% annually to £779 – an 11 year high

Related topics:  Landlords
Warren Lewis
23rd September 2013
Landlords

Stephen Nation, Head of Lettings at the 300 branch Sequence Group which includes Barnard Marcus, William H Brown, Fox & Sons and other leading brands, comments:

“As we predicted, August has been another record breaking month, with the number of new tenancies up 8% on last month and 17% annually. Average national rents are at their highest level for 11 years, but this has not deterred tenants, with demand up 2% on the month and 11% annually. The supply of new properties to the market has seen no change on the month and if this continues to be outstripped by demand then we will see further significant rises in rents.

The London picture is very similar, with the number of people looking to rent increasing by 5% on month, but the number of new properties available decreasing by 1%. As a result of this competition rents in London grew by 2% on month and activity levels in the capital have been phenomenal, with new tenancies agreed rising by 12% both on month and annually.

Buy-to-let mortgage applications are up 31% annually, the highest increase for over two years. This is in line with the Bank of England’s announcement that banks have lent a record £5billion in Q2 this year, which indicates that buy-to-let has not relinquished its status as the investment of choice for those looking to bolster their savings returns.”

Demand / Supply Analysis

New tenant applications are up 2% on month and 11% annually across the UK, which shows that the appetite to rent is still strong. However, the supply of properties has remained the same when compared to last month and as a result the ratio of new applicants to new properties has increased to 4.5/1. This rise in competition explains the growth in monthly rents.

In London new applicants to rent are up by 5% on last month, whereas the supply of properties is down by 1% on the month. Much like the national scene, the monthly increase in applications has caused the ratio of new applicants to new properties to increase to 4.9/1.

Mortgage Availability

The number of buy-to-let mortgages applications is up 31% annually, the highest increase for two years, indicating that buy-to-let is still unchallenged as a popular investment. The Funding for Lending Scheme combined with other financial initiatives have allowed the banks to lend a record-breaking £5billion in buy-to-let mortgages according to the Bank of England, which underpins the growing confidence rippling through the housing market.

Tenant Viewing Activity Relative to Agreed Tenancies

Nationally, both the number of viewings and new tenancies are at their highest levels since 2011. However, the number of new tenancies (up 8%) outpaced the number of viewings (up 2%), a sign of the strength and competition in the market. As such, the ratio of viewings to every new tenancy decreased in August to 7.8/1 viewings to every tenancy from 8.2/1 in July.

In London, the ratio of viewings to new tenancies has decreased sharply to 11.6/1 from 12.6/1 in July. This is because new tenancies agreed are up a substantial 12% on month, but viewings are down a significant 9%, again showing the competitive nature of the market where tenants are moving extremely quickly on their desired property.

New Agreed Tenancies

In August new tenancies agreed have increased again on July’s record breaking month, by an astounding 8% monthly and 17% annually – the highest number of agreed lets for over three years. The rate of growth both nationally and in London has been significant, as seen in Graph 4. London has seen both 12% monthly and 12% annual increases in new tenancies agreed, which outpaces the national market in terms of the rate of monthly growth.

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