
Despite recent fluctuations in the UK rental market, buy-to-let remains a viable and attractive investment strategy for investors looking for a diverse portfolio. While tenant demand and the number of available rental properties have shifted, the market is still far from reaching its pre-pandemic equilibrium.
Demand
Rightmove's data shows that the number of available rental properties is currently 14% higher than last year, and tenant demand is down 16%. However, compared to 2019, there are 20% fewer homes to rent and 22% more tenants looking to move.
This imbalance means that competition for rental properties remains high. Each available property is receiving an average of 17 enquiries from prospective tenants. Though this is down from last year's peak, it is still significantly higher than pre-pandemic levels.
Rightmove estimates that approximately 120,000 more rental properties are needed to bring rental price growth back to a more normal pre-pandemic range of 2% to 3%. This highlights the persistent supply-demand gap in the rental market and the potential for further growth in rental prices.
Government Policies and the Rental Market
The new government's pledges to increase housing supply and improve conditions for tenants offer a glimmer of hope for the rental market. However, Rightmove also emphasises the need for further support for landlords to encourage investment in the private rented sector, particularly in energy-efficient upgrades. The rental market is still significantly busier than pre-pandemic levels, but it's heading in the right direction.
The Future of Buy-to-Let
Rightmove's director of property science, Tim Bannister, highlights the importance of landlord investment in increasing the supply of rental properties. He also calls for government support for landlords through tax changes, incentives for energy-efficient upgrades, and a more positive perception of landlords.
Buy-to-let is far from dead. The persistent supply-demand imbalance, coupled with potential government support and the ongoing need for quality rental accommodation, indicates a promising future for buy-to-let investors. While navigating the market requires careful consideration and strategic planning, as with all investments, the potential for long-term returns remains strong.
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