According to figures produced by the Deposit Protection Service, average rents reached £834 in the final three months of last year, that’s an increase of £16 (1.96%) over the previous quarter.
To encourage the growth of the private rented sector there’s currently a record number of buy-to-let mortgage products on offer.
The steadily rising cost of renting has been blamed on the scarcity of available rentals, a supply shortage that in turn has been blamed on a general housing shortage in the UK, and landlords leaving the sector.
The DPS’s quarterly Rent Index shows that rents in the South West were rising above the trend. A region that traditionally lags the national average, the South West showed the biggest increase during the past 12 months.
The Covid-19 migration out of towns and cities has helped rural regions, and especially so sought after holiday destinations. This perhaps goes some way to explaining these above average rises, along with the increased demand for detached rental properties increasing the most.
DPS managing director Matt Trevett told MortgageStraegy.co.uk:
“During Q4 2021 rents increased in the vast majority of UK regions and across all property types, with demand for detached properties driving the greatest increase in rental value for these properties.
“Our figures also show that renters were less likely to move during the past 12 months, suggesting lower availability of stock and therefore perhaps more limited options for moving. “We’re also seeing definitive signs of recovery in London, particularly the return of the popularity of flats in some areas, suggesting that some tenants are coming back to the capital.”
More mortgage choice
Meanwhile, according to Moneyfacts data, as rents have continued to rise, the number of buy-to-let (BTL) mortgage products available on the market has increased substantially in the last two years,
Moneyfacts found that at the start of2022 there were 3,528 BTL mortgage products available, which they claim is the highest number since September 2007, just before the credit crunch financial crisis when the market was “red hot” and there were 3,662 to choose from.
January 2021 and landlords’ choice was down to 2,003 products while there had been 2,583 in January 2020, just before the Covid-19 outbreak in the UK.
BTL mortgages are currently available at rates averaging 2.94% for a two-year fix at all LTVs with five-year fixed rates on all LTVs at 3.18% having been around this level since October 2021.
Moneyfacts finance expert Eleanor Williams says:
“The rise of 222 [BTL] deals is the highest month-on-month increase in availability that we have recorded since July 2021.
“The latest rental market report from Zoopla indicates that rental demand grew to a 13-year high in the third quarter of 2021, and while demand for property continues to outstrip supply, it also recorded an increase in average UK rents of 4.6% over the year, so there may be those considering investing in the sector.
“Our latest data suggests that providers seem prepared to offer a variety of deals for landlords who are either investing in property or are looking to lock into a new deal, so anyone considering their next move in the BTL arena would be wise to seek advice from an independent broker to assess the changing market.”
The rent rises over the last 12 months may not continue into 2022. Experts are now predicting a dramatic slowdown or levelling off as we come out of the pandemic and as people start to feel the pain of rising living costs.
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