The mismatch between demand and supply will keep the rental market strong in 2023 according to an agency chief.
Nicky Stevenson, managing director of Fine & Country UK, says the next 12 months will follow the pattern of the past year.
“Annual rental price growth across England and Wales is currently nine per cent. Apartment price growth is outpacing that of houses, at 11 per cent versus 8.2 per cent” she says.
“With the exception of the South East, at £3,792 the threshold for a premium market rent in London is more than double that of any other region. During 2022, 90 per cent of all new rentals of £3,500 per month or more have been in the capital, of which 65 per cent were apartments. Across the remainder of England and Wales, 94 per cent of such rentals were houses.”
But she accepts that, at some point this year, the rent rises seen recently will moderate even though a mismatch between demand and supply will endure in principle.
“With higher mortgage costs set to impact profit margins, [mortgage lender trade body] UK Finance predicts that £13 billion will be lent to buy to let landlords for new purchases over the course of 2023 and £30 billion to landlords looking to remortgage. Both are significantly lower than in 2021 and more in line with pre-pandemic levels.”
And Stevenson cautions that although there will be some major changes for the sector this year - notable changes to Capital Gains Tax from April - the long-awaited Rental Reform Bill will take some time to become law, even if it is introduced into Parliament in the near future.