The shift is putting pressure on an already tight rental market, with real estate agents saying they manage an average of 36 applications per property as competition among renters has reached record levels this year. Photo: Press Association
The property sector in the UK has seen a shift in demand for rental properties due to rising inflation and the acute cost of living crisis.
Rising interest rates put potential homeowners on hold with their plans to buy now with mortgage rates near a record 6%.
According to RightMove, the number of inquiries about rental properties is up 23% this time compared to last year, while the total number of movers looking to rent or buy in the market is down just 1%.
In addition, four in ten (42%) who plan to buy something in the coming years say they already have their full savings balance and look forward to more financial security. Another 43% are saving.
“There are signs that mortgage rates and availability are starting to stabilize after two months of turmoil, with indications they could fall further next year,” said Rightmove.
Read more: UK house prices fall in 2023 amid rising mortgage rates – RICS
But the shift is putting pressure on an already tight rental market, with real estate agents saying they manage an average of 36 applications per home, as competition among renters has reached record levels this year.
The number of smaller rental properties available, such as studios and one- and two-person homes, has decreased by 4% compared to last year, while the sales market has increased by 13%.
Real estate firms said first-time buyers have been hit hardest by mortgage rate hikes, and some in this group are now looking to the rental market as a short-term option.
However, the number of small rental properties on the market is 4% lower than last year, so the choice is limited.
“Now that there are signs that mortgage rates are stabilizing, the indicators are that they will stabilize at a higher level than previous buyers have been looking for,” said Tim Bannister, real estate specialist at Rightmove.
“If someone has saved their down payment and is ready to move in, they may find that this presents a better opportunity now than it did a few weeks ago, especially as more options enter the market and some sellers are closing in on Christmas. more competitive pricing leading up to Rs.
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It comes as the recent fall budget guarantees stamp duty savings through early 2025.
It was confirmed that the lowest threshold at which homebuyers start paying stamp duty remains £125,000 to £250,000, saving up to £2,500 for movers.
New buyers will also receive additional relief from having to start paying stamp duty, set at £425,000, as long as the total value of the property is less than £625,000. This offers tax savings of up to £11,250 for new buyers. The previous threshold at which buyers first started paying stamp duty was £300,000.
Read more: Will a stamp duty cut further drive up house prices in the UK?
Amardeep Lal, Head of Lettings at Manning Staunton, said: “Since the onset of the pandemic, the number of tenants looking to rent has far outstripped the number of available rentals. This means it has become very competitive among renters to secure a viewing and property as there are only a limited number of viewings we can book.
“If a potential tenant can share as much information as possible with us at the beginning of the process, we can find one for them faster and they will be at the front of the queue for properties that become available. could.”