The residential lettings market in the UK is experiencing as a new trend - an uptick in agreed upon pre-let tenancies given supply constriction and strong demand going into 2022. Further, with the prospect of rising interest rates, there has been an increased uptake in fixed rate mortgages both in London and across the country at large.
The average rent across Britain remained stable in November at £1058 per calendar month (pcm) with HomeLet rental index data putting the average rent in London at £1,757 pcm whilst the rest of the country was positioned at £889 pcm. Despite the uncertainty of the pandemic, as well as a traditional seasonal lull, the private rented sector is demonstrating remarkable resilience and rental yield consistency as demand for residential rental homes continues to outstrip supply in the UK housing market.
Across both commercial and residential sectors, the emergence of pre-letting is a key trend, which is shaping the outlook for occupancy over the next year. Landlords such as British Land are cited in reports by the Evening Standard to have pre-let significant office space, whilst residential landlords are also taking advantage of excess demand to secure long term tenants. House builders and property investors in London for instance prefer to let while waiting for an upturn in the market for optimum sales.
Lenders are increasingly relaxing their criteria for higher rental yield HMO properties. These are particularly popular lets for students and young professionals, who have recently made a return in meaningful numbers to universities and offices in the UK, with five or more rooms per property. Buy-to-let specialist Landbay points out that a greater number of first time landlords are considering larger properties with the propensity to deliver higher yields.
Given the strength of the employment market, and UK inflation now over 4 per cent, interest rate rises are much expected in the course of 2022 with the Bank of England Monetary Policy Committee still cautious over guarding against the Omicron variant of Covid-19. Given this anticipated jump in base rate, as well as the mitigated volatility of residential property investments, investors are attracted to fixed rate mortgage terms that take advantage of the historically low interest rate environment currently.
The private rented sector has remained exceptionally resilient, and demand for has remained high, something we expect to continue seeing as we shortly say goodbye to 2021 and look forwards to the opportunities 2022 will bring