How the rental industry fared during the pandemic
The dynamics in the rental industry have changed dramatically during the pandemic. The demands on a variety of rental properties – in terms of indoor and outdoor space, in addition to an increased emphasis on location due to the new culture of remote working – continue to change and it can sometimes be difficult to owners to follow.
As a slew of data is now emerging from Q2 2021, it’s natural to compare this to conditions in Q2 2020, when the initial lockdown was in full force. For those operating in and around the housing / mortgage market, we all realize how lucky we have been during this time. After about a breathtaking 12 months in the industry, we are still seeing house prices rising and the proportion of homeowners reporting increasing demand for tenants has peaked in five years. Factors that really demonstrate the magnitude of this progression, even during such difficult times for many.
Focusing on the BTL market, this five-year peak emerged from a Paragon Bank study which found that just under 39% of homeowners saw demand for tenants increase in the past three months, 18.2% saying it had increased “significantly” and another 20.3% reported slight increases. The percentage of homeowners seeing increasing demand has increased by 8% from the previous quarter and there is a continuing trend of increasing tenant demand in the form of a 25% increase year over year. other. Additionally, there was a 2% decrease in the proportion of homeowners reporting a decrease in tenant demand compared to the first quarter of 2021.
Looking at it from a regional perspective, Yorkshire and the Humber saw the biggest increases after 65% of landlords reported an increase in tenant demand, 28% significantly and 37% slightly. This was closely followed by Wales and the South West, where a net increase in tenant demand over the past three months was reported by 64% and 63% of homeowners respectively.
It has been interesting to trace the impact of the pandemic on urban areas where renting rooms is a big part of the rental market at large and, with the lifting of restrictions across the UK, this is leading to to the question: does a return to urban life now seem more attractive?
The SpareRoom Quarterly Rentals Index – a snapshot of how the room rental market is performing across the country – highlighted that the second quarter of 2021 saw interest increase in the capital, with demand compared to the offer up 71% year-over-year across town. While central west London may have seen the biggest regional rent cuts, it also saw the biggest increase in demand relative to supply (up 191% year-on-year. the other), followed by the center-east (up 133%) and the south-west (up 98%).
Across all parts of the UK, the East Midlands, South West, Wales and Yorkshire and Humberside saw the biggest increase in room rents, all up 3%. In fact, the only areas outside London where rents fell were Northern Ireland (-2%) and the West
Midlands (-1%). Within the UK’s 50 largest cities, Birmingham saw a significant drop in rents (-6%), followed by Middlesbrough (-3%), while Dundee and Peterborough saw the largest increases, both in 9% year-on-year increase.
In recent years, many homeowners have moved away from standard single-family homes, due to the appeal of high-performance urban HMOs and multi-unit options. This demand may have eased over the past 12 to 18 months, but as the urban attraction grows, the call from homeowners to strengthen their portfolios accordingly may also increase. And it’s a trend that will be worth following over the remainder of 2021.