Businesses across all market sectors have been forced to adapt and evolve over the past few months in line with the demands of a new world – however temporary or longer-term these trading conditions may prove to be. Inevitably, some have coped better than others, although it’s been tough for everyone with so many factors having been beyond our control.
As the doors to non-essential high street stores reopened, it was interesting to note the reaction of the British public to this move – in terms of the numbers and their outlook. We saw differing images from the tightly packed crowds at Nike Town to the sad reality of some well-known stores still unable to trade. Consumer footfall and the volume of physical retail business will provide a strong indicator of consumer confidence and this is important for intermediaries as the strength of this confidence is also often reflected in the property market. When it comes to the private rented sector, it’s also important to follow trends as they materialise. In a similar fashion, many of these tendencies are likely to be generated and tracked by high street sources, with lettings and estate agents often at the heart of this. With that in mind, let’s take a brief look at some recent discoveries.
Data from Knight Frank highlighted that the number of valuation appraisals for rental properties was the highest number on record in the week ending 6 June, 19 per cent above the five-year average. Demand was also said to have spiked, with the weekly number of new prospective tenants 40 per cent above the five-year average, representing the second-highest figure this year. Unsurprisingly, despite this increase, activity levels in the lettings market are yet to return to where they were during the second half of 2019 when demand was boosted by uncertainty in the sales market due to Brexit-related political volatility.
Additional statistics from Hamptons International suggested that average rents have fallen by 1.6 per cent compared to the same point last year. These were said to be largely driven by falls in London and the South East. This represents the third successive month where rents have fallen. On a regional basis, Scotland recorded the fastest rental growth, with average prices rising by 3.6 per cent over the last 12 months. Interestingly, Hamptons also estimated that 153,840 properties were sold by landlords in England and Wales during 2019, although this is not a net figure so does not account for those bought. This number was lower than the level in 2018, when 174,840 were sold.
These statistics offer a limited overview of the current buy-to-let market, and we have to bear in mind that these will differ on a regional basis. Exactly where the BTL market goes from here, and how various landlords react to current market conditions, remains to be seen. What we do know is that demand is still strong for rental properties but with some tenants feeling the pinch, landlords have to be flexible where possible in juggling costs and yield. It’s also clear that the private rented sector will play a crucial role in meeting the housing needs of a growing number of UK residents and that lenders are doing their utmost to help landlords meet this rising demand. This isn’t an easy ask, but some positive signs are emerging that we are heading in the right direction.
Ying Tan, founder and chief executive, Dynamo
