Tenants are looking to stay in their existing rental property for longer as they look to avoid higher rents elsewhere, new insight from Rightmove reveals.
A fresh study among almost 1,300 landlords found that the most common length of tenancy is over two years, with 18% of landlords saying their average length of tenancy has increased over the past year. Only 5% of landlords have seen the average tenancy length decrease.
The latest data from Rightmove’s Quarterly Rental Tracker shows that national asking rents outside London are rising at the fastest rate ever recorded, now standing at £1,088 per calendar month (pcm), up 11% on this time last year. It is a similar story in the capital where rents are up over 14% to £2,195 pcm.
There are also more than triple the number of tenants enquiring as there are rental properties available, making it the most competitive ever rental market. The lack of available stock is a combination of more tenants staying put in longer tenancies, coupled with high demand from people who didn’t move during the pandemic, or who moved in with friends or family temporarily.
Many landlords have recognised the challenges of rising household bills for tenants, with the majority – 63% – choosing not to put up rents over the past year, while a third have increased rents.
Some agents in bigger cities report that tenants who were able to move into a property for much lower than the average rent for an area during the pandemic have seen rents increase back up to market value again now that demand has increased.
Analysis of features in over 20,000 build to rent listings on Rightmove has revealed a significant increase in demand for properties with all bills included. Over the past year enquiries from tenants have jumped by 36% for this type of property, the biggest increase out of all available features. Homes with balconies, communal gardens, properties allowing pets and those offering zero deposits all came equal second, with enquiries jumping by 22%.
Tim Bannister, Rightmove’s director of property data, said: “A shortage of rental homes and strong demand for the properties available has led to a greater number of tenants choosing to renew their leases and stay put, rather than re-enter a competitive rental market. People who had been waiting to see what happened last year are now being faced with record rents and so are seeking out properties where they can have more certainty over their outgoings, with all bills included becoming increasingly sought after.
“Landlords may have been tempted to put their rents up given the high demand from new tenants, but many understand the affordability challenges of rising rents and bills, as our study shows that the majority are charging their tenants the same as a year ago. Many landlords build up a relationship with their tenants over a number of years, and they will want to keep a good tenant for longer if they can rather than cash in on a rent rise in the short term.”
Richard Davies, head of lettings at Chestertons, says that the Rightmove report accurately reflects what is happening in the market at the moment.
He commented: “The market is showing a definite trend of tenants extending their rental agreement. YTD to the end of April, we have seen an 11% increase in the number of tenants renewing their contract compared to the same period last year.
“The reasons [for tenancy renewal] vary, with some tenants being worried about the cost of living and wider economic uncertainty which prevents them from taking on an costly move. Others have realised that demand has pushed rents up considerably, which makes staying put financially more viable, especially where they have paid their rent on time and are taking care of the property.
“Another factor are interest rates. Some tenants may have seen their rental situation as a temporary solution to save up for their property purchase, however, the recent boost in interest rates has resulted in house hunters putting their purchase on hold for now.”
This is the downside that Rent Controls cause too.
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