Calculating rental demand in an area is not as difficult as it used to be for the average property hunter. Generally, you should expect those regions in which demand outweighs the number of properties available to deliver higher rents and vice versa.
Whether you are a tenant looking for somewhere to set down roots or a buy to let landlord searching for the best investment, picking the best area is paramount. That’s where Northwood come in. Our agents have local knowledge and expertise that can help you to secure your ideal property.
The Demand for Rental Properties
Demand is often driven by the economy of the location concerned. For example, you should expect high demand for rental properties in London because it’s the capital and a hub for many business sectors including tech, healthcare and construction from around the world. Rentals in London are also in demand because of the price of properties, the transient population and difficulties in getting onto the housing market ladder in the first place.
For tenants, demand and its effect on prices is extremely important. According to recent research by the Independent, renters are spending half their wages on rent. In London, this rises in some cases to a staggering 89%. When there are not enough houses or flats to meet demand prices rise naturally and, with wages still largely stagnating, that can present problems for tenants hoping to find a good deal and still have money left over at the end of the month.
Outside London, demand for rental properties can vary quite dramatically. If you’re a buy to let landlord looking to expand or begin your portfolio, the good news is that demand is set to continue to increase across the board. It’s calculated that over a third of young people will rent for their entire lives rather than buy their own home. Here are just a few hotspots for potential landlord investment:
- Manchester is a good place to invest with a 5.55% increase in rental yields over the last year.
- Colchester is next on the list with a yield of 3.78%, while Luton is third, partly because of its closeness to London and easy access by rail.
- Glasgow, Aberdeen and Paisley are good choices if you are looking to invest in Scotland, particularly when you take into account some lower house prices which deliver bigger yields than in other parts of the country.
For tenants, demand for rental properties can not only determine the price you may have to pay but whether you get a place to live at all. In London, according to the Telegraph, an average of 8.9 people contest each room available for rent. In Swindon, the ratio is 6 to 1 and Norwich 5.6 to 1.
The most demand is certainly seen in our larger cities. Some of this is driven by the employment profile of the area but it can also be affected by issues such as having a large student population. Lower rents can be an indication of reduced rental demand (they can also be driven by lower house prices and less appealing locations). Hull is currently economical with rents on average around £395 per calendar month, while Burnley is not far behind on £400 pcm.
If you are thinking of renting you can check out rental prices around the UK, by using the BBC’s interactive tool to find average rents and house prices.
Of course, if you are an aspiring landlord, developing a good relationship with your local letting experts can help no end, especially if you are unfamiliar with the area you are looking to invest in. Speak to one of Northwood’s local property experts, you can find your nearest branch here or book a Free market appraisal here.