The latest Rental Demand Index from estate and lettings agent, Barrows and Forrester, has revealed that rental demand has surged during the third quarter of 2023, with a surprisingly strong element of this growth coming from regions in the South East, like West Sussex and Hampshire.
The Rental Demand Index by Barrows and Forrester is a quarterly review of tenant activity, analysing rental demand based on the proportion of total rental market listings that have already had a let agreed.
The latest index shows that across England some 39.8% of rental stock has been snapped up by tenants in the third quarter of 2023, rising by 4.1% from the second quarter, when 35.7% of stock was rented.
However demand for rental property was fiercer last year, when it stood at 46.0%, 6.2% higher than current levels.
Hottest rental demand spots
West Sussex in the South East – known for its coastline and picturesque villages – is the most in-demand region of England, where 56.5% of landlords who list properties have already reached an agreement with renters.
Bristol ranks as the second most in demand rental market at present, where 55.5% of properties have already been let.
Northamptonshire sits third with rental demand at 55%, with Bedfordshire, Hertfordshire, Somerset, Buckinghamshire, Hampshire, Essex and Cambridgeshire also amongst the most in demand rental markets.
Weak demand in London
Surprisingly, given that you associate the capital with such a struggle to secure a rental property, Greater London is registering below-average rental demand, at 32.6%.
What is more, the Prime region of the City of London has the weakest demand across the whole of England, at 28.6%.
Quarterly growth spots
Leicestershire is the fastest growing region among renters, where demand increased by 10.6% between the second and third quarters. This growth is coming from a low base however, as only 34.3% of homes have been rented, lower than the national average.
It’s a similar trend with West Yorkshire, where growth of 9.0% brings it up to 35.2%, while in Tyne and Wear strong quarterly growth of 10.3% has pushed demand up to a significant 48.1%.
At the other end of the spectrum demand has dropped off the most in the Isle of Wight (-16.4%), Rutland (-12.1%) and Dorset (-11.4%).
Lancashire has seen the biggest surge in interest from tenants since last year, rising by 7.4% to 39.0%, which is around the national average.
Again, Leicester is a growth area, at 6.6%, followed by Worcestershire, at 6.0%, bringing demand to 34.3% and 48.4% respectively.
At the other end of the spectrum demand dropped year-on-year in the City of London (-16.8%), Nottinghamshire (-15.9%), and Greater London (-11.3%). Tenants in those regions are likely in better positions to be more choosy about the properties they rent.
Managing Director of Barrows and Forrester, James Forrester, comments: “Tenant activity is showing no signs of slowing down, which is reassuring news for the nation’s landlords who should be able to avoid lengthy void periods between tenancies as a result.
“What’s striking is demand is stronger outside of London, as properties in south coast areas like West Sussex are being rented out like hotcakes.
“Clearly a high number of tenants are still prioritising green space and having access to the coast, from which you can draw a number of conclusions.
“Tenants could be looking for more value away from major cities in commuter towns, more could be taking advantage of the post-pandemic work from home culture, while older tenants could be moving to areas more suitable for their needs, where they’re better placed to start a family.
“Regardless of the reasons, it’s encouraging that demand is rebalancing away from the capital and becoming more evenly distributed across England.”