It’s no surprise that the rental market is still re-adjusting after the massive impact of the global pandemic. But what does this mean for the future of renting? Below, we’ve gathered together our rental market predictions for 2022.
Grainne Gilmore, the Head of Research at Zoopla reports in a recent article that for the duration of the pandemic, data was showing what would be described as a ‘doughnut demand’ in major cities. This means that there was a stronger demand in the commuter zones, and no demand in city centers, making rental growth stall in this period. Although the usual city-center demand for rentals died down at the start of the pandemic, the market did not shift to other areas. Students and some working professionals moved back in with families, and many international students and renters couldn’t access the UK and no longer needed to be here, meaning that we are now seeing the build-up and demand from March 2020 to September 2021 spark an upwards pressure on rents.
Looking forward into 2022, with the world now reopened and normality almost back, research shows that 22 percent of people currently want to move house, which is significantly higher than the usual 5 percent. However, the ability to work from home has made office dwellers feel as though they can seek properties that are further afield.
Purpose-Built Student Accommodation
Purpose-Built Student Accommodations (PBSAs) are seeking higher rental prices, having gone through variable occupancy rates during Covid. There has been a massive shift in demographic for this market meaning that PBSAs have had to look at changing their risk profiles. For example, there has been a massive domestic push in China, meaning that international students from there are no longer traveling abroad or seeking their studies in the UK. In turn, seeing as the pay upfront risk profile was widely preferred by Chinese students, this will now change to a more adaptable pay-as-you-go model.
Build to Rent Accommodation
There will be a surge in demand for Build to Rent (BtR) accommodation. This is largely due to the above increase in people wanting to move back to city life. More often than not BtRs have built-in gyms, communal workspaces, on-site security, and bills and amenities are included, making them perfectly convenient for this demographic. We also predict that PBSAs and BtRs will merge as there is a lot of fluidity in these markets.
Due to the combination of landlords wanting to exit the buy-to-let sector and general demand in the market, rental prices were at a 13 year high during 2021. Average rental prices could rise by another 4.5 percent throughout 2022, and rental prices could exceed earnings in areas where it is usually cheaper to rent in the country.
However, it’s not all doom and gloom, and the negative changes in the market have sparked some positive movements. The government Reform Bill, set to be in place for 2023 would introduce the following:
– Removing Section 21 from the 1988 Housing Act
– Making the database of rogue letting agents and landlords become accessible to the public
– The introduction of lifetime deposits for renters, helping to reduce the cost of moving house
Lets with pets
Well, there’s no way you could leave your lockdown companion behind, after all. Due to the pandemic, and people staying in their tenancies for longer, the demand to be able to keep pets has risen rapidly. To be more precise, Rightmove recently released stats stating that it was 120 percent higher in July 2021, and only 7 percent of landlords are pet-friendly. There could be more attempts by politicians to make it mandatory for landlords to allow pets, which will enable landlords to benefit from a wider pool of potential renters, who will look for longer contracts.
What this all means for renters
The pressure is on for professionals, with companies now having a hybrid work model, and mandating Flexi-work policies, there’s a shift in professionals moving back to cities, but are having to battle with higher rent prices and high costs of living. For students, the outlook is a lot brighter, as the academic year is off to a normal start, students are supported by finances and bursaries, are not salary driven, and PBSAs are looking for higher occupancies. However, generally speaking, due to prospective challenges in the rental market, and challenges with eligibility, landlords will become fussier when renting their properties, due to the reducing number of ‘quality tenants’.