We recently had a house which we bought earlier this year come onto the rental market for the first time. We had just finished gut renovating it after several months of work. It's a two bedroom semi-detached Victorian style property with a decent sized outdoor terrace / garden.
The property listing was online for a grand total of 48 hours. In that time we received no fewer than 29 enquiries which produced 15 promising viewings from qualified prospective residents. From those 15 viewings, there were 9 applicants for the property.
Based on those numbers you might think that the rent had been set too low but in actual fact, the monthly rent was set at a higher price than any comparable property in the area, sometimes by as much as 10%.
It is clear that for high quality homes at affordable prices there is a serious imbalance between the supply of available properties and tenant demand. As a result it's not surprising that rents in Greater Manchester have risen by close to 20% in the last two years and in some sub-markets it's significantly more.
Increased demand for properties, especially houses, has been well documented in the media since the covid pandemic began nearly two and a half years ago. Less well publicised are the reasons behind the dwindling supply of properties coming to market. These include:
1. Fewer tenants deciding to move out at a time when they would likely have to pay a higher rent than they are already paying to secure a different property on the market.
2. Landlords exiting the market in recent years due to tax changes (reduced mortgage interest tax relief & stamp duty surcharge on additional property purchases) and additional legislation.
3. Landlords selling up following the recent strength of the housing market.
4. The UK's inability to build enough houses in the areas that people want to live (especially when you consider actual houses vs. apartments). In certain areas such as well connected suburbs close to but not directly inside city centres - there is simply no more land to build on. In the few cases where land is available, there's no desire to change planning laws to replace a few houses with mid or high rise apartment blocks.
For all these reasons and more, it doesn't seem likely that the component of CPI comprised of rental housing costs is likely to be disappearing anytime soon.
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