Tenant trends change constantly, influenced by external factors such as the pandemic and the cost of living crisis. These inevitably have an impact on tenant preferences and the choices that they make when looking at where to rent next. Here are five of the ways that the current circumstances of high demand, high rents, and low supply are affecting tenant decisions and behaviours in the private rented sector.
1. Tenants are expanding their property search areas
As rents increase, tenants' budgets are starting to get squeezed, with reports showing that rents have been rising faster than the average earnings over the last 21 months.
Tenants are therefore starting to look further afield for new homes that they can afford - and can secure before someone else snaps it up, while demand is high.
Data suggests that renters are expanding their search radius for properties by 50 square kilometres on average - so agents should consider how they can cater for that geographical breadth of demand and advise their landlords accordingly of the opportunities that this may offer.
2. Student property demand is rising
Back in November 2022, research showed that there was a shortfall of 1.5 million beds in the purpose-built student accommodation sector, so tenants were turning to the private rented sector to find accommodation.
This trend is likely to only become more prominent. Student accommodation provider Unite has shared that 98% of its properties are already booked up - compared to the 91% of bookings that it expects at this time of year. With this high demand, the student landlord has already increased its rents by 7%.
3. Young people are staying with their parents for longer
However, there is some respite from those pressures: young people are staying with their parents longer to save money for a house deposit. This therefore delays how many new renters join the market - with some skipping the rental sector altogether to buy a home.
Between January to May 2023, only 4.6% of people renting a new home were first-time renters, down from the 6.1% in 2015.
“The number of first-time renters has been steadily falling since 2015, pushed down by the spiralling cost of living and record-breaking rental growth which has stretched affordability to the edge of its limits," explains Aneisha Beveridge, Head of Research at Hamptons.
4. Saving for a deposit is taking more time - so renters are getting older
Those lucky few that can stay with parents save up much faster - but it now takes 10 years to save for a deposit on average across England, due to higher rents and house prices. This means that, particularly in bigger cities like London, first-time buyers are inching into their forties.
Some lenders have proposed solutions, such as the 100% mortgage for renters. However, there has been some criticism in how small dips in house prices could mean that homeowners would then find themselves paying more on their mortgage than their house is worth.
5. Good landlord / tenant relationships are worth more
Uswitch has shared that more than a third of tenants in a recent survey would agree to renew their tenancy agreement with a rent increase included - as long as they had a positive relationship with their landlord.
This likelihood of renewing with increased rents grows the older the tenant gets too. Over one in four tenants aged over 55 said they'd accept a new contract with a rent increase - but the same number also voted for a renewal without an increase.
What makes a good landlord-tenant relationship? Good communication, according to the survey.
Originally published on Goodlord's Newsagent.
