Demand for rental property declines in Q2

The latest analysis of rental demand from Barrows and Forrester has revealed that the slight fall seen during Q2 is an indication that many tenants may be sitting tight due to ongoing economic uncertainty.

Related topics:  Landlords,  tenants,  Rental market
Property | Reporter
28th June 2023
To Let 855
"Topline demand for rental homes has remained largely static during the second quarter of this year and this suggests that many tenants are sitting tight during times of economic uncertainty"

The latest rental demand index by Barrows and Forrester, which gauges tenant demand for rental homes across each county of England based on the level of available rental stock that has already been marked as let agreed, has found that 35.6% of England’s rental stock has already been snapped up by eager tenants. This marks a marginal nationwide decline in demand versus the first quarter of the year, down -0.2% and a -3.5% annual reduction.

Current hottest spots for rental demand

In terms of the hottest spots in England’s rental market, Dorset tops the table with current rental demand sitting at 59.3%

In West Sussex, demand measures 58.1%, and tenant appetites are also strong in Rutland (55.8%), Somerset (54.1%), and Wiltshire (53.9%).

On the other hand, the coldest spots for rental demand in Q2 2023 are Leicestershire (23.7%), Merseyside (24.7%), and Nottinghamshire (25%).

Quarterly changes

In terms of quarterly growth, the Midlands is leading the way with the biggest increase being recorded in Herefordshire (+7.8%), followed by the West Midlands (+6.6%), Tyne & Wear (+6.3%), and Northumberland (+6%).

The biggest quarterly drops have been recorded in Cornwall (-14.4%) - which, interestingly, was home to England’s strongest rental demand in Q1 - followed by Shropshire (-7.1%) and Essex (-4.9%).

Annual Look

The local market to have seen the biggest annual growth is Rutland where rental demand is up +7.8% compared to this time last year. Staffordshire has seen an annual rise of +5.6%, followed by Herefordshire at +5.3%.

The largest annual drops in demand have been recorded in the City of Bristol (-13.5%), Warwickshire (-12.2%), and Nottinghamshire (-10.5%).

Managing Director of Barrows and Forrester, James Forrester, commented: “Topline demand for rental homes has remained largely static during the second quarter of this year and this suggests that many tenants are sitting tight during times of economic uncertainty.

"That said, the market is generally in a state of limbo during this time of year as many tenants have already made their move whether it be for education or work purposes.

"There remains, however, a strong level of demand in many areas and this is encouraging news for the nation’s landlords. While the success of a buy-to-let investment may be primarily focused on the yield available, it’s also about finding consistency with tenants and avoiding void periods.

"It will be interesting to see what impact the incoming rent reform bill will have on rental stock and, therefore, demand when it becomes more difficult to execute no-fault evictions, however, the market remains in good stead despite a difficult few years for landlords.”

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