Annual data analysis from property marketplace TheHouseShop.com reveals the top five British cities for high rental demand over the past year.
As buy-to-let investment becomes increasingly expensive and difficult, due to recent legislative changes from the Government, it is more important than ever that landlords are able to fill their properties and ensure regular rental income. By understanding the local rental market, landlords can invest in an area with high rental demand, which will help to reduce the likelihood of lengthy and expensive void periods.
Top five rental demand hotspots of 2017
Annual data from each area was further broken down by: the demographic of tenants making enquiries, listing types, property types and the number of bedrooms, in order to better understand what tenants in these areas are looking for and what is driving rental demand in these markets.
Nick Marr, the Co-Founder of TheHouseShop comments on the findings: “Our annual data shows that London was the area that received the most enquiries on property listings available to rent, followed by Birmingham, Bristol, Leeds and Manchester. The data varied from region to region, depending on what our users were looking for, which has helped to build a clearer picture of the rental market in each city.
“This data can be utilised by buy-to-let landlords, as they can use it to gain a better understanding of the local rental market for each of the top five areas, should they consider expanding their property portfolio in 2018 by choosing to invest in one of these areas.”
He adds: “However, the rental market in the UK is extremely fast-paced and changes frequently, resulting in new hotspots developing on a yearly, or even monthly, basis. It’s advisable for landlords to keep an eye on current rental market trends and to reevaluate their investment portfolio accordingly, in order to take advantage of a new investment opportunity in the next high demand location.”
When assessing the age of tenants making enquiries in these rental demand hotspots, TheHouseShop found that, in Bristol, the majority of tenant enquiries came from the millennial (18-34-year-olds) demographic, at over two thirds (63.64%) of total enquiries. In comparison, Manchester saw the majority of enquiries coming from generation X (35-50-year-olds), at 71.43%, while Birmingham’s highest proportion were baby boomers (51-69-year-olds), at 34.55%.
The Rental Demand Hotspots of the Past Year
London also recorded a high number of millennial enquiries, accounting for over half (50.65%) of enquiries, helping it become the top location for total tenant enquiries.
One possible explanation for this could be the fantastic career opportunities for this age group in the capital. London came in fifth place as a 2017 millennial hotspot in a recent report carried out by TheHouseShop, which further highlighted the excellent employment opportunities available for young professionals in the capital.
Once the data was broken down by property type, TheHouseShop found that there was a marked difference in demand for houses over flats, and vice versa, depending on the location. For example, London saw a higher number of enquiries for flats, at 69.98%, whereas visitors making enquiries on a property to let in Leeds preferred houses, at 59.15%.
With rent prices at an all-time high in densely populated areas, such as London, tenants were more likely to seek out less expensive flats or apartments. Meanwhile, smaller cities, like Leeds, where rents are much more affordable, saw higher demand for large houses.
Looking at the data broken down by number of bedrooms, Leeds has the highest proportion of enquiries for one-bedroom studios or flats, at 35.92%, followed closely by London, at 34.01%. Bristol had the smallest number of enquiries for one-bed homes, at just 21%.
Larger, three-bed homes were most popular in Birmingham, at 28.94% of total enquiries, while pricey London saw the smallest number of three-bed enquiries, at just 17.82%. Two-beds were most popular in Bristol, with almost half (47.48%) of all enquiries made on this type of property.
Landlords can use this data to determine which types of properties they should be investing in when targeting these areas. The last thing landlords want is to invest in a property, only to find that there is little demand for this type of home in the local market and end up struggling to find tenants, and experiencing lengthy and costly void periods.
A spokesperson for the National Landlords Association (NLA) comments on how void periods affect investors: “Recent data from the NLA has shown that a third of landlords (33%) have experienced a void period in the last three months, which have lasted 64 days on average, resulting in serious financial consequences for many buy-to-let landlords.”
Void periods can hit landlords hard, particularly those with mortgages. However, buy-to-let investors owning property in the rental demand hotspots of 2017 will have seen high levels of tenant demand over the past year, and should have minimised void periods as a result.
It is important for landlords to remember that the rental market in the UK is constantly changing, and new research is showing that 2017’s rental demand hotspots may already be in decline. Therefore, landlords are advised to regularly reevaluate their investments, and always be on the lookout for the next up-and-coming rental hotspot.
We remind landlords of the importance of protecting their properties if they do suffer a lengthy void period. Our partner and award-winning Landlord Insurance provider Just Landlords can help: https://www.justlandlords.co.uk/unoccupiedinsurance