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Andrew Luxton MRICS FARLA, Partner and Head of Stags Residential Lettings department, comments on the current lettings market.
Nothing remains the same for long, which has especially been the case over the last few years. We are beginning to see some changes affecting the lettings market; although demand remains strong, the extremes of the height of the Covid-19 pandemic are beginning to ease.
From the peak of the market, driven by low stock and exceptional frenzied tenant demand from those moving into the South West, the market is showing signs that it is beginning to stabilise.
At the time of writing, Stags’ available register of property to rent is 100% up on 12 months ago. Whilst demand is still strong and lets can be achieved quickly, rents are more price sensitive, especially at the top end.
According to the latest Homelet lettings survey, the average South West rent is £1083pcm, compared to a rent of £910pcm two years ago. This compares to a national average rent of £1143pcm, as opposed to £974pcm two years ago. All surveys by lettings bodies confirm the South West market is strong and demand remains high, with good numbers still looking to relocate.
The supply of property is increasing due to a number of factors; we are seeing more relets coming back to the market as tenants begin to move around more readily. In addition, as the sales market slows and the outlook is uncertain, we are seeing increasing numbers of accidental landlords returning, looking at letting as a short to medium-term option. Furthermore, those who have profited from letting property through Airbnb and holiday lets are finding that market much tougher and can see the benefits of a steady long-term income with less hassle, a trend which is likely to continue.
At Stags, we have seen a 39% increase in the number of market appraisals conducted this year, which further reinforces that stock levels are increasing. At the top end, we are seeing the heightened rents achieved mid-Covid easing, but with demand for properties that are £650pcm to £1200pcm continuing. Rents within this price bracket are therefore likely to remain strong. However, pressures from the cost of living, energy costs and other factors will ensure tenants are far more price sensitive.
History will show that during periods of economic and political uncertainty, which we certainly have now, coupled with rising interest rates and an easing sales market, people often turn to the lettings market as an alternative option. Consequently, this sector will likely become busier over the next few months.
Contact your local Stags office for more advice and information.