Rental reality… Belvoir advises on how the market is performing across the country
The Belvoir Rental Index has been producing unique, valuable data for landlords and investors for the past 12 years and is a fantastic free resource for anyone who is interested in the PRS. Recent rises in advertised rents have been significant, and the Rental Index revealed that in Q4 2021 rents increased by 10.5%, year on year, versus Q4 2020. However, when compared to the average rent in Q4 2019 the increase is a little lower at 9.5%. This suggests that over a two-year period, rents increased by just over 4.5% per annum for 2019 and 2020, so the rent rises over a two-year period are a little higher than inflation over this period.
Looking forward, most of Belvoir’s franchisees are anticipating a rise in house and flat rent inflation, although some expect rents for flats to be static in the first part of Q1 2022. Room rents are anticipated to either remain the same, or due to the pressure of tenants now desiring their own space because of the pandemic, there could even be an oversupply, and this could result in some falls.
With Covid restrictions finally lifting more tenants in general may be looking to move on, and this could allow additional stock to come onto the market, enabling more people to move into the homes they desire.
Regional trends
Belvoir’s Rental Index is also able to look at advertised rents in specific regions, and this provides incredibly useful information for landlords who want to know the true picture of what is happening in their area. In Q4 monthly rents varied from £599 in the North East, £680 in the North West, £719 in Yorkshire, through to £1158 in the South East and £1545 in London.
As well as the Rental Index, Belvoir also conducts a quarterly survey of offices across the network, which can add further detail to what is happening in specific territories.
Three quarters of all offices across the Belvoir network reported a rise in rents for flats in Q4, with almost a quarter reporting static rents. Belvoir Brighton was the only office to report a decline in rents for flats and houses. When it came to houses, not a single office reported a decline in rents. When asked to predict how flat rents were likely to perform in Q1, there was a 50:50 split of Belvoir offices predicting an increase or static rents, with just Belvoir Brighton predicting a decrease.
Property shortages
Q4 revealed a continued shortage in all properties, especially two, three and four bedroomed houses. Natalie Boardman of Belvoir Tunbridge Wells says: “Stocks are low, as more landlords are exiting the market, which puts upwards pressure on rents.”
Tenant occupancy
Tenants continue to occupy properties for extended periods. Belvoir offices reported:
25.8% of tenants remain for 13-18 months
Just under 39% remain for 19-24 months
32% of tenants rent for over 24 months
There were no tenancies for less than a year.
Tenant arrears
Belvoir offices reported that rental arrears remain low:
Just under 10% of offices reported zero rent arrears – an increase versus Q3 21
Almost 65% of offices reported less than three renters in arrears – an increase versus the first three quarters of 2021, all of 2020 and most of 2019
Just under 19.5% of offices reported 4-10 tenants in rent arrears – a decrease compared to the first three quarters of 2021, all of 2020 and most of 2019
6.5% of offices reported 11 or more tenants in arrears – the lowest level since Q4 2019.
Eviction numbers also remained low, with 61% of offices reporting zero evictions and almost 23% reporting a single eviction in Q4. Offices that did carry out evictions reported that these were mostly due to landlords selling their property, or the result of anti-social behaviour.
Property sales
Belvoir offices seeing up to three landlords selling properties increased to 61% in Q4. The number of offices with zero landlord sales fell to around 3%.
Voids
In Q4 one-week voids fell to almost 23% in Q4, compared to almost 40% in Q3.
To read the Belvoir Q4 2021 rental index in full, visit https://www.belvoir.co.uk/rental-index/
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