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Rising rents and attractive property types

09 Aug 2022

Dynamics across the rental sector have always been fluid, and the requirements of a variety of rental properties continue to evolve in terms of length of tenancy, space, property type and location, especially with the emergence of a new remote working culture. A lack of supply and heightened demand is also combining to drive rental prices higher.

Rising Rents Article

This was evident in the Q2 2022 BVA BDRC Landlord Panel research which outlined that almost 8 in 10 landlords reported increasing rents in the areas where they operate, up 6% from Q1 and 29% when compared to Q2 2021 year ago. Similarly, more than half of landlords have increased rents in the last 12 months (+7% vs. Q1 ’22).

Looking ahead, the proportion intending to increase rents in the next 6 months remains largely unchanged at 43%, with this more likely to be the case for those with larger portfolios (63% of landlords with 11+ properties).

On a regional basis, landlords operating in Yorks & Humber, the South West and the North East were suggested to be the most likely to report seeing rising rents. (slide 31) Landlords with property in Yorks & Humber and the South West are most likely to have increased rents in the last 12 months, with those in the East of England least likely.

Focusing on property type, the research pointed out that terraced properties edged semi-detached houses as the most attractive purchase target, with the former also being the most popular property type to sell. In contrast, there is currently a preference towards buying rather than selling semi-detached properties, with only 22% intending to sell vs. 43% intending to purchase. The opposite is true for individual flats, with 34% of landlords looking to sell this type of property compared to only 27% having flats as a purchase target.

With the supply squeeze set to continue over the summer months, rental prices are expected to rise further across the UK which is likely to attract more landlords from a purchase perspective. And it will be interesting which property types prove attractive to these landlords.

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