"The lack of rental property supply is a key reason for the increase in demand"
- Finbri
Finbri’s survey of 755 UK landlords revealed that 71% reported either an 'increase' (46%) or a 'significant increase' (25%) in demand for their rental properties throughout 2023.
This represents an increase from the year before, the 2023 Landlord’s report found that 63% of landlords had experienced increased demand for their properties.
How many landlords experienced an increase in demand?
7 in 10 landlords experienced an increase in demand, with this level differing depending on the property type and location. This percentage was even higher in London, with 83% of landlords in the capital experiencing an increase. 26% of landlords said they’ve experienced no change in demand, while just 2% felt they had less demand.
Which types of property are in the highest demand?
Landlords with apartments have experienced the biggest increase in demand. Flats, detached and semi-detached properties all had similar levels of increased demand. Terraced properties had the lowest level of increased demand - but even with the lowest increase, 70% of landlords said their terraces were in higher demand than previously.
The most popular property types and the increase in demand (%) landlords saw for their properties in 2023:
1: Apartment (83%)
2: Flat (75%)
3: Detached (74%)
4: Semi-detached (73%)
5: Terrace (70%)
Where did rental demand rise most?
London landlords saw the most significant rise in tenant demand, with over 8 out of 10 (83%) reporting an increase. 15% of London landlords felt demand remained steady, while just 2% experienced a decrease
The South West closely followed London, where 82% of landlords identified increased demand.
The only regions where less than 70% of landlords experienced increased demand were Yorkshire & the Humber and Wales. But even still, landlords in these regions experienced a 67% and 63% increase in demand, respectively.
The UK regions that experienced the biggest increases in demand in 2023:
London (83%)
South West (82%)
Northern Ireland (76%)
Scotland (76%)
East Midlands (75%)
West Midlands (75%)
North East (74%)
East of England (74%)
South East (74%)
North West (71%)
Yorkshire & the Humber (67%)
Wales (63%)
How have Landlords responded to increased rental demand?
Across the UK, increasing costs are leading landlords to raise their rental fees, and unsurprisingly, landlords who experience an increase in demand for their rental properties are more likely to increase their monthly rental price. In 2023, 56% of all landlords increased their rental fees.
However, a higher percentage of landlords who experienced an increase or significant increase in demand increased their rent (60% and 65%, respectively).
Despite the increase in demand, landlords still sold up
32% of UK landlords sold at least one of their rental properties in 2023, and even landlords that saw demand for their properties increase sold up. 35% of landlords that had an increase, and 41% that had a significant increase in demand sold a rental property last year. This confirms that even when landlords have the added security of increased demand, the costs are still too high.
What's driving the rise in rental costs?
Average rents have risen by 7.2% in the last year, reaching £1,223 (ONS) a month - an increase of £960 yearly for renters. But what is causing the rise in rental costs?
High demand and limited supply: Average rents have increased, with demand continuing to outpace supply, leading to a record rental price growth. Rents have continued to rise, with renters working 125 days of the year just to cover their rental costs.
Economic factors: Rapid nominal earnings growth, up by 13% since the beginning of 2022, coupled with high inflation, has prompted landlords to raise rents to keep pace with increasing costs and maintain profitability. Finbri’s survey found that 51% of landlords will raise their rents to cover additional expenses. However, with increasing rents and higher mortgage rates, renters are finding it harder to get on the property ladder, increasing demand for rental properties.
What's the outlook for tenants?
Despite the anticipation of further rent increases, the outlook for tenants carries mixed predictions. The expectation of sustained high demand suggests that rents will continue to rise, placing additional financial strain on renters.
While 51% of landlords are taking advantage of the increased demand by raising rents, 32% are looking to sell their properties, adding complexity to the situation.
A spokesperson from bridging loan broker, Finbri said: “The lack of rental property supply is a key reason for the increase in demand. Landlords are leaving the market, not enough rental properties are being built, and tenants are finding it increasingly difficult to move from renting to home ownership, contributing to increased demand for available properties.”
