Propertymark's annual PRS review for landlords in Preston, Leyland, Chorley and Blackburn
HOW WAS 2022?
More people than ever looking to live in the private rented sector
A rising population and a lack of adequate housing construction has led to a peak of demand from home hunters looking to rent in 2022.
DEMAND – NEW TENANTS REGISTERED
2022 saw peak numbers of prospective tenants registering. A new monthly record was set in September at 147 new prospective tenants per member branch. Demand for rental property has grown every year since Propertymark records began. At the same time, there has been no growth in the size of the private rented sector (PRS) to house these tenants2. With such a mismatch in demand and supply, it is no surprise that rents have risen most keenly in 2022.
2 See English Housing Survey, StatsWales, Scottish Household Survey, Northern Ireland housing Statistics, England and Wales Census 2020
SUPPLY – WHAT DOES STOCK LOOK LIKE
A mismatch of supply and demand
The number of properties available to rent dipped at the start of the year but soon recovered to a steady state around 10 properties per Propertymark branch.
However, the steady state of supply has not been enough to match demand. With an average of 11 prospective tenants registering for every available property across 2022. Two clear peaks were seen in the mismatch between supply and demand, the start of the year in January and February plus the summer months in July August and September were particularly strained.
Mismatch in supply and demand means a year of rent increases
Over the year, rent increases were the norm in many areas of the UK. The percentage of Propertymark agents seeing rent rises in their areas has risen dramatically over the last five years as pressure on the sector to house the UK public has risen with no change in the number of homes provided in the PRS.
THE OUTLOOK FOR 2023
Concerns and opportunities for landlords
According to Propertymark letting agents’ greatest concern for landlords in the year ahead was the impact of incoming legislation. This was followed by diminishing yields (44 per cent) and issues with damp, condensation, and mould.
At the same time, agents also saw the potential for increasing yields as being a great opportunity for landlords in 2023 (57 per cent). This can be explained by contrasting concern for landlords with mortgages and those without. Landlords with buy-to-let financing and fixed-terms coming to an end this year will see their costs increase significantly due to rising interest rates. Those without mortgages on their let property should see yields rise as house prices drop and rents rise. The next major opportunity in the year ahead will be a chance for further portfolio investment as the price of property comes down (31 per cent).
Concerns and opportunities for tenants
The largest concerns agents have for tenants in 2023 is rising utility costs (78 per cent). This is closely followed by a lack of available properties (74 per cent) and rising rents (68 per cent). Over the last year properties available to rent have been far outstripped by prospective tenants looking for somewhere to live. This has driven up rents; however, we are starting to see supply and demand rebalance, and pressure on rents coming down in recent months (as previously discussed).
Agents see the biggest opportunities for tenants to be the extension of pro-tenant legislation in all nations of the UK (28 per cent), increasing quality of stock following investment by landlords (26 per cent), and remaining in their current home and benefitting from renewing their tenancy on a below-market rate (22 per cent).
You can download the full Propertymark report, including the sales market, here Annual Review of 2022 and Outlook for 2023