Why the renting market for Landlords is booming

The UK renting market is experiencing a much-welcomed boom. Those owning buy-to-let properties are finding themselves in a position that they have never witnessed before. They’re inundated with tenant enquiries, and the rent that can be charged is on the up. Of course, that’s not to say that being a landlord is all plain sailing, and that’s where landlord legal insurance is a must. This protects you even when life gets a little challenging.

Assuming that you get yourself set up with the best level of cover, it makes sense to venture into the renting market if you’re able to do so. While property has long been regarded as the way to wealth, the current state of the renting market means that this is the best time that there has ever been to jump in and get involved.

Where is the renting market right now?

The renting market is at the stage where it’s breaking numerous records. The number of tenants that explore a single property has doubled and rents are going up at the fastest rates ever recorded. What’s different right now, compared to previous booms, is that these increases aren’t just taking place in London, or even just in the south of the country.

When you take a look at the north of the country, the booming renting market is flourishing too. This has seen the average rent increasing to £1,000 per month whereas last year this was sitting just below £900. All the while, rental yields are on the up and this means that landlords are seeing increased profitability.

This boom has been welcomed. The last few years have seen landlords squeezed with new tax rules and an abundance of new legislation. The average landlord certainly wasn’t a happy one. So, what has led to such a change? Let’s take a look.

The first time buyer struggle

There have long been barriers to getting onto the property ladder. First, you’d need to save for a deposit. Assuming that you could even do this the next test would be your credit rating. Pass through this with flying colours, and we then have the issue of affordability to face. What’s happened of late and meant the first and last hurdle just mentioned, have grown ever larger.

House prices are on the up. Over the last 5 years, figures show that prices have been increasing at a rate of 3.5% each year. That’s added an additional £40,000 to the price of an average home. Higher prices require higher deposits. Add to that the recent increases in interest rates and you then have the prospect of higher monthly payments too which impacts the affordability aspect.

The main issue here is that wages haven’t increased in line with house prices. In fact, over the same time period, wages have only grown at a rate of 2.7%. This excludes many from the chance to buy their first home and leaves them reliant upon the private rental sector. If not fully excluding, it certainly delays their dreams - it now takes employees an average of 15.7 years to save for a deposit.

Supply and demand

The UK has long faced a housing crisis. As things currently stand, the country needs an additional 230,000 rental homes if it wants to avoid a significant shortfall. Estimates state that, over the next decade, there will need to be 227,000 new homes every year to provide for the 1.8 million new households.

There are two impacts here when it comes to the renting market. Firstly, any house that is advertised for rent is snapped up extremely quickly. Secondly, house prices continue to bE pushed upwards which means that we arrive back at our previous point - it takes too long to save for a deposit and so people are forced to stay in rented accommodation for longer.

Tenants are paying over the odds

If it’s not enough that rents have increased at their fastest rate ever, what else is happening is that tenants are offering to pay above and beyond this. Why? Well, looking back to the supply and demand issue, tenants realise that there is a housing shortage and they’re prepared to pay more to secure themselves a home.

Of course, opting for the tenant who will pay the most isn’t always the best decision. These people are still capable of causing issues and bringing unwelcome expense. The best course of action is to ensure that you have landlord legal insurance in place.

Levelling Up

It’s hard to have avoided talk around the government’s Levelling Up strategy. This has been positioned as being a flagship policy that levels the playing field and makes society fairer. A significant part of this focuses on the private rented sector and is set to improve the quality of life for tenants around the country.

Part of what is being launched includes the end of no-fault evictions, a register of poor landlords, and improvements being made to the energy efficiency of properties. While all of this may sound like a reason to steer clear of renting market, it is exactly the opposite.

Landlords fearing yet more change are selling up. As they sell up they drive demand ever higher. It means that those left behind get to pick and choose which tenants they want, they get to set rents at levels that are profitable, and they get to enjoy less competition.

Final thoughts

With the renting market being at an all-time high, you could be forgiven for thinking that it surely can’t last. The reality, however, is that the conditions in place now are unlikely to see any major change, even years down the line. There really never has been a better time to be a landlord.

The only watch out here is that property involves people and people are capable of letting you down. If you are stuck with a non-paying tenant, or any other issue, you will soon realise that landlord legal insurance is the best investment that a landlord can ever make. Why not get in touch and see just what we can offer?