Demand outstripping supply in the UK rental sector

The UK’s private rented sector is experiencing a surge in demand, resulting in properties being tenanted with fewer gaps between contracts. For buy-to-let landlords, reducing void periods is crucial as it affects rental income and overall return.

The average void period is a key metric that reflects the state of the rental market, indicating the level of completion among tenants for each available property. With demand outstripping supply in the UK rental sector, landlords have been experiencing quick turnovers and high occupancy rates.

SIGNIFICANT DECLINE

According to a new report, the average void period in England dropped by an impressive 26% from 23 days to 17 days in February[1]. This significant decline is great news for landlords as it can positively impact their bottom line. In some regions of England, such as the North West and East Midlands, void periods decreased even further – by 33% and 31%, respectively.

Other areas with strong tenant demand and fast turnaround times between tenancies were Greater London, the North East, South East and West Midlands. These regions all recorded falls of more than 20% in their void periods, indicating robust demand across most parts of the UK.

MARKET MOMENTUM

These figures are the healthiest seen since September 2022, when landlords experienced an average void period of just 15 days. The latest data indicates renewed rental market momentum after the traditionally quieter months of December and January.

The report findings highlight that not only have rents been on the rise due to steep competition in the rental sector, but average tenant salaries have also been increasing, contributing to greater affordability.

RENTAL HOME

In February 2021, the average cost of a rental home in the UK was £1,089. This was 1% higher than January’s data but still lower than September’s figures. However, it is worth noting that this is the highest average rental price since October last year.

Meanwhile, the average salary of a tenant in England is February was £32,168 – an increase means that tenant salaries are only slightly behind the overall annual rent increase across the country.

IMPROVED AFFORDABILITY

Interestingly, both the North West and South West regions have seen improved affordability for tenants as their average salaries rose at a faster rate than rents. This is welcome news for renters in these regions, who can now enjoy better value for their money.

The good news for existing landlords is that, with low levels of housing stock, tenants are moving quickly to secure properties as everything listed is getting snapped up extremely fast. This has led to a renewed increase in rental costs, which are significantly higher than last year’s average.

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