The Rental Market Bounces Back 30% After Initial COVID-19 Shock

Hello readers. The past month has certainly been a challenging one for property investors as we have all needed to adjust to what we are told is a ‘new normal’.  

For me, the past week in particular has been extremely busy, as I have been spending a considerable amount of time speaking with landlords about a strategy for their properties to minimise voids and ensure that their investments are protected.  

In addition to this, I have continued to see some really positive results as I have received several enquiries from new landlords who require support filling their rooms and the Home Share team have continued sourcing tenants using our virtual viewings and contactless check-ins. This is really encouraging as it goes to demonstrate how effective virtual viewings have been! 

I have also found myself discussing some of the predictions for the rental market with several investors following the release of an upbeat Q1 rental market report by Hometrack UK. This report really did come as welcome news as it showed just how resilient the rental market is! 

Some encouraging trends included how the rental market has regained some momentum over the past few weeks with demand bouncing back by 30%. This is particularly reassuring for buy-to-let investors as the two weeks leading up to 30th March saw a 57% drop in demand.  

So, the question we should be asking is: What does this rebound mean for property investors as demand for April remains lower than March 2020? The main thing is that investors should not be too concerned about voids taking too much longer than usual to fill. As we have seen however, it is extremely important to have your virtual viewings available since in-person viewings are not possible.  

Another encouraging point is how annual rental growth sits at 2.4% for 2020; up from 1.5% in March last year and just above a 10-year average of 2.3%. For the local market in Medway, this means that, for example, a flat in Gillingham High Street let at £800 in 2019 could now be re-let at £820 and a three bedroom house on Chatham Hill let at £1,100 in 2019 could now be re-let at £1,125. The graph below shows this trend over the past 10 years. 

Headline UK Rental Growth (%YOY and %MOM) 

You can view the full report from Hometrack here and it certainly is worth a read. This positive news is particularly welcome given the updates from the sales market where a 13% drop in value is expected by Q1 2021! 

I would love to hear any thoughts that you may have on whether this reflects your experience in sourcing new tenants over the past few months. It certainly is one to watch very closely as the months progress and I will do my best to keep you updated, particularly with any news from the local market in Medway. 

As ever, if you need any advice and guidance, I will be more than happy to help, and you are welcome to contact me by emailing hasan@home-share.co.uk. 

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