Stephen Nation, Head of Lettings for Sequence, which includes Barnard Marcus, William H Brown and Fox & Sons, comments:
“Demand to rent across the UK remains insatiable with the number of tenants seeking to rent up 14% annually in May and 5% on the month. This demand still isn’t being met by supply however, now an all too familiar story in this market, with new rental properties available down by 7% on last year. This means that monthly rents will continue their upward trajectory – in May rents were up 11% on May 2013.
The London market remains the most competitive across the UK and successful tenants need to move swiftly to secure a property. New agreed tenancies soared 34% annually in the Capital. Rental increases are more subdued than the national average, remaining flat on the month but up 7% annually. This is partly because we are seeing some new supply edging into the market.
Buy-to-let mortgages remain our most popular mortgage product but applications are subdued in May, down 9% annually and 4% on the month. This can be attributed to a number of factors including the initial knock on effect of MMR and some uncertainty around interest rate rises.”
Demand for rental properties nationwide is up 14% annually but in the same period the supply of properties to rent has fallen by 7%. Demand from tenants is up 5% on the month; April saw a monthly dip in demand but the trend is now back on track for the remainder of spring and into summer. Supply of rental properties fell by 5% on the month. As a result the ratio of applicants to available properties is now 5.5/1 – the surging tenant demand, and supply deficit, has pushed this up from 5/1 in April.
By contrast, London has seen a marginal annual rise in rental property supply, up 3%, however this is far outweighed by the rising annual demand – up 35% annually in May. However, on a monthly basis London tenant demand and rental supply both increased by 3% which is why the ratio of demand to supply remains at 6.1/1 in May, when compared to April. However, this is up from last year’s ratio of 4.6/1 due to the difference in the annual increases.
Applications for buy-to-let mortgages are down 9% annually and 4% on the month in May, but this is still higher than two years ago and remains the most popular mortgage product. MMR has led to a cooling of mortgage demand as the new rules become established, but there are also other factors at play, such as uncertainty around when interest rates will rise and concerns around increasing house prices eating into yields.
