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Rightmove experts share PRS predictions for 2024
Tuesday 9th January 2024
Many landlords faced the challenge of higher buy-to-let mortgage rates in 2023, contributing to rising rents for tenants - expected to increase again.
Landlords will need to balance the need to pay their mortgage with finding a good tenant they can develop a longer-term relationship with and who can also afford the rent in their local area, latest analysis from Rightmove suggests.
Many faced the challenge of higher buy-to-let mortgage rates in 2023, contributing to rising rents for tenants - predicted to be 5% higher by the end of 2024 outside of London and and 3% higher in the Capital.
Yet in the final months of 2023 the number of rental properties seeing a reduction in asking rent during marketing edged up, with 23% of properties now seeing a reduction in advertised rent, compared to 16% this time last year.Christian Balshen, Rightmove's Head of Lettings says: "Landlords have always prioritised finding a good, reliable tenant for their home alongside the reality of having to pay the mortgage each month.
"Higher mortgage rates have had a knock-on effect for renters this year, as landlords who have faced these higher rates and therefore higher monthly costs, have needed, in some cases, to pass these on to tenants to some extent."
But he adds: "Many tenants will have a cap on what they can or are prepared to pay in rent, and an increasing number of landlords are having to reduce their advertised rent, suggesting more are reaching this cap.
"It will be vital for landlords to work closely with a local letting agent this year, who will be an expert in the dynamics of their local area, to help them to find the right tenant at the right rent for their local area."
Meanwhile, the Renters (Reform) Bill will mark a substantial change in the way a home is rented to a tenant and may mean that making green improvements to rental homes takes a back seat for some landlords.
In a recent Rightmove survey amongst landlords, a quarter (26%) said they planned to make energy efficiency improvements to properties rated below a C, compared to over a third (36%) last year.
Similarly, of those landlords who have properties below a C, 21% now say they plan to sell them, compared with 33% in April 2023.
David Cox, Rightmove's General Counsel, says: "The Renters (Reform) Bill is now going ahead after several delays this year, though the earliest it's likely to come into effect is the end of next year, and a general election could add further complications.Above all else letting agents and landlords want clarity, so that they can plan for the future and agents can provide the right guidance. The rental sector is filled with legislation and compliance requirements that agents and landlords need to keep up with. The earlier they understand the final contents of the Bill, the better they can prepare."
He adds: "It's likely that EPC requirements in some form will re-appear in the near future, so landlords with lower EPC rated homes should still keep this in mind and consider the improvements they might make.
"However with the deadline scrapped and all the attention on the Renters (Reform) Bill, it may be that while focusing on the changes the Bill brings in, considerations about green improvements take a back seat for some landlords."