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Demand for rented homes across the UK has risen by almost a quarter in a year, research has found, putting further pressure on an oversubscribed market and pushing record private rents even higher.
The number of people inquiring about homes to rent has risen by 23% this time last year, according to property website RightMove, with some prospective buyers putting their plans on hold in the hope that mortgage rates will drop. new year
This has led to an increase in how much landlords are charging, with separate research from London estate agents Foxtons reporting rents in the capital rose 22% year-on-year in the first nine months of this year, with average rents now at a record £571 a week.
However, mortgage prices and availability are beginning to stabilize two months after the Liz Truss government’s mini-budget sent shockwaves through the market, with signs that rates could fall further next year.
The average two-year fix has fallen to 6.12% now from a peak of 6.65% in late October. Meanwhile, the average five-year fixed rate this week fell below 6% for the first time since the mini-budget and is now 5.92%, according to MoneyFacts.
Rightmove warned that mortgage rates will stabilize at higher levels than buyers have been used to in recent years. The Bank of England is forecast to raise its base rate to 4.25% by next spring, although this is lower than once feared.
The rise in mortgage rates has hit first-time buyers the hardest, especially those who were already financially stretched.
They are likely to face more intense competition than in the sales market for a suitable rental home, and the choice is more limited, Wrightmove said. The number of smaller available rental homes – studios and one and two-bedroom properties – is down 4% compared to last year, while it’s up 13% in the sales market.
Christian Balshen, property expert at Rightmove, said: “It is extremely disappointing for so many people in the rental market, which is in such high demand. Aspiring first-time buyers who now have to turn to the rental market are exacerbating the situation. We are seeing a few more properties coming on the market, but nowhere near enough to meet the demand.”
Amardeep Lal, head of lettings at Manning Stanton, an estate agency in Leeds and West Yorkshire, said: “Since the pandemic began, the number of tenants looking for property has far outstripped the number of rental homes available. This means it has become very competitive to look between tenants and secure the property, as there are only so many views we can book.”
Until the pandemic, rents closely tracked incomes, with rent growth averaging 2.5% per year since 2005 and earnings rising 2.4%. According to research published last month by Rightmove, advertising rents in some other cities and towns, including Newbury, Manchester, Cardiff, Edinburgh and Birmingham, have risen even more than in the capital.
“The impact of post-Covid returns to the city has been intense,” Foxtons said. “While history suggests that the rental market will correct for earnings, the underlying supply/demand balance may be squeezed by an influx of foreign students and corporates who are not dependent on personal earnings.”
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