Relief for tenants as competition cools

Tenants breathed a sigh of relief as competition for rental accommodation cooled in winter, according to the latest research from flatsharing website, easyroommate.co.uk.

Related topics:  Specialist Lending
Millie Dyson
4th January 2012
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The average number of potential tenants competing for each rental room on the market is now 3.4 – down from 4.1 in the height of the 2011 summer market, according to easyroommate.co.uk’s analysis of over 86,000 room rentals around the country, and 30,000 flathunters’ profiles.   

In December, the number of renters registering to find a room fell by 13% compared to June 2011. In contrast, the supply of rental rooms has increased steadily, with a rise of 7% over the same period.

Jonathan Moore, director of easyroommate.co.uk comments:

“Tenants looking for new houseshares will have breathed a sigh of relief as competition for accommodation eased late in the year. A combination of a seasonal drop-off in tenant demand, and an encouraging increase in the number of rooms to rent coming onto the market has helped alleviate pressure.

"Traditionally, the winter triggers a slow-down in the rental market, but for many tenants on the move, it presents a window of opportunity.

“Although the number of homeowners renting out spare rooms is steadily climbing, many simply aren’t aware of how much they can earn.

"|In top hotspots like Cambridge, homeowners are making an average of £5,460 per year, with the first £4,250 tax free – making a sizeable dent in mortgage repayments.”

Despite this improvement for prospective renters, there are still 3% more tenants looking for rooms than in June 2010 as frustrated first-time buyers turn to cheaper forms of accommodation.

In fact, in June 2010, 3.1 tenants competed for each room, compared to 3.4 currently.

Jonathan Moore continues:

“Competition may have dipped with the approach of Christmas and the New Year, but it is set to remain strong in the long-term.

"There are currently 17,000 fewer first-time buyers able to secure mortgages each month than before the credit crunch, and this will continue to drive demand for cheaper rental accommodation.”

CITY RENTAL HOTSPOTS

Easyroommate’s analysis of over 50 of the UK’s largest towns and cities reveals competition for rental room has been fiercest in Cambridge, with an average of nearly than 12 potential tenants registering per room.

The South East was the most competitive region in total, with three cities in the top five, featuring London (6.7 renters per room), Brighton & Hove (6.1 renters per room) and Oxford (5.6 renters per room).

The concentrated demand has pushed up rents in these areas, with the average cost of a room in Cambridge 25% above the national average, 20% higher in Brighton and Hove, 16% in Oxford and 48% higher in London.

Jonathan Moore comments:

“London and its satellite towns, where the local economy has been moving at a different pace from the UK, have been experiencing much higher levels of demand. Even in off-peak, young professionals are looking for flexible and cheap living arrangements as they move for job opportunities.

"However, university towns too are showing much higher demand than supply, which is bolstering average room rents.

"In Cambridge in particular, there is severe shortage of accommodation, which is driving competition between professionals and students already looking to quickly secure second year houseshares.”  

Only in West Bromwich and Salford did the supply of rental accommodation outweigh the demand, with an average of one tenants per two rooms in West Bromwich, and 0.8 per room in Salford. Telford and Walsall had an average of 1.3 and 1.4 tenants per room respectively, while Ipswich registers an average of 1.5 tenants competing per room.

In these areas of lower demand, rents are typically much lower than the national average.

All of the five towns with the least demand had rents lower than the national average - with Walsall, the cheapest on the list, 11% cheaper than the UK average.

Jonathan Moore continues:

“In areas like West Bromwich and Salford, house prices are much more affordable for first-timers, placing a ceiling on the number of frustrated buyers looking for rental accommodation.

"In turn, this is lowering competition, preventing rents from rocketing up to the levels seen in other parts of the UK.”
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