Supply-Demand Gap Continues Shaping Rental Property Market

Demand for rental property market continues to grow, but supply has not kept pace. In fact, a report shows that almost 10 tenants competed for each available rental property in August of this year.

Are Landlords Becoming More Selective?

The report recorded a considerable rise in rental property demand. It found that tenant registrations grew by over 27% in August 2024 compared to July. In the same period, rental arrears also increased by 2.6% as the lack of supply is making it harder for low-income families to find a place to rent.

According to some agents, the strong demand for mid- and lower-tier properties has allowed landlords to be more selective and opt for tenants who offer higher rents. This has made it challenging for vulnerable individuals to find housing.

Agents have also observed many short-term rentals shifting to the long-term market due to regulatory changes.

How is the Rental Property Market Changing?

The UK housing market faces a chronic lack of stock in both sales and rental sectors. This continues to influence property values and rental prices. But now, with the new Labour government in power, the progress of the Renters’ Rights Bill, the announcement of ambitious targets and the autumn budget set to be presented on October 30, landlords and tenants can expect many more changes in the coming days, changes like:

• Reforms in planning regulations
• Building Safety
• Taxation
• Net-Zero Targets

Conclusion

Tenant demand is surging, and landlords are becoming increasingly selective as they navigate affordability challenges and regulatory shifts. While high-end properties struggle to attract tenants due to financial constraints, demand for mid and lower-tier homes remains strong, leaving vulnerable renters facing difficulties.

Meanwhile, affordability challenges persist across the board, with a massive portion of the population finding it hard to meet rent or mortgage payments. As the housing sector braces for major changes driven by new government policies and the upcoming budget, reforms in areas like planning, building safety and taxation are set to reshape the market over the next five years.