Renting causing tenants to experience anxiety - what's the rental market outlook for 2023?
New data has revealed the average rent in the UK has risen to £1,078, double the rate of earnings growth and our recent survey of over 1,000 renters discovered 27% of tenants have experienced anxiety as a result of renting.
The rental market outlook for 2023 seems bleak as the UK braces itself for a recession, rising base rates are causing landlords to leave the market whilst the demand for rental properties continues to outstrip supply - a worrying issue for renters. However, there are landlords looking to further invest in property in 2023. So what’s the current outlook for the year ahead?
Our UK Renters' Report has examined the UK rental market including responses from over 1,000 UK tenants and has discovered 27.07% have experienced anxiety due to renting with a combined 46.25% either Concerned (31.07%) or Strongly concerned (15.18%) about their property security in the current rental market.
Finbri's Stephen Clark, comments, ”The outlook for the rental market in 2023 is uncertain. With base rates increasing, almost half of landlords will look to sell their properties should the base rate reach the predicted 4.5%, at the same time demand for rental properties is increasing. And whilst over 80% of UK renters want to own a property in the future, three quarters have admitted that they don’t think they’ll be able to own a property this year.
“However, a combination of factors, such as the proposed Renter’s Reform Bill increasing renters’ rights, more flexible rental contracts, an increased focus on affordability, and more investment in rental housing, could lead to a more stable rental market by the end of 2023.“
In the short-term, the rental market is likely to remain volatile for some time as rents increase, demand outstrips supply and the economic downturn takes its toll. Landlords may continue to struggle to find reliable tenants, and many renters may continue to face financial difficulties. However, in the longer-term, it's possible that the rental market could become more vibrant, as the economy begins to recover and more people look to rent rather than buy. This could include rent control measures, rent assistance programs, and other initiatives designed to make renting more affordable and attractive.
Rents on the rise
The housing shortage, cost-of-living crisis and interest rate rises have had a significant detrimental effect on the property market - with the base rate expected to reach 4.5% in 2023 many would-be first-time buyers have no choice but to enter the rental market. Rental demand is expected to remain strong in 2023 as tenants are unable to save enough for property deposits, concern grows about high mortgage rates, and being unable to obtain a mortgage for a lender, amongst other reasons renters are unable to get on the property ladder currently.
Lack of rental stock as landlords leave the market
Rental regulations will likely become tighter, as governments seek to protect tenants from exploitation and ensure the rental market remains fair and competitive. This could include introducing rent controls, tenant protections, and stronger enforcement of existing laws. This has prompted landlords to exit the market, with the number increasing by 13% in the last 4 months of 2022.
Additionally, as the UK base rate rises to the current 3.5%, should it reach the expected high of 4.5% in mid-2023, 44.66% of landlords would consider selling their properties, further reducing the amount of rental stock.
The lack of stock has been a major issue in the rental market, as the UK’s population continues to grow., Whilst stock availability is currently an issue, the government is introducing a Renters’ Reform Bill to make renting more secure, fair and affordable for tenants.
In addition, the government has introduced a range of measures to help renters, such as rent relief payments and eviction moratoriums. These measures are designed to ensure that renters are protected and provided with stability during the economic recovery.
The UK Landlords' Report and survey of over 1,000 landlords discovered 62.24% had seen increased demand for their properties over the last 12 months. The demand for rental properties is expected to remain high in 2023, as the cost of living and mortgage rates continue to rise and more people look for flexible, secure rental contracts.
Many first-time buyers may be unable to obtain a mortgage due to rising base rates, which will drive more people into the rental market. Renters are also likely to be looking for more flexible rental contracts, as they seek to ensure their rental payments are secure and their rights are protected. This could include more fixed-term contracts, rent caps, and tenant protections.
45.15% of landlords still look to invest in property in 2023
Whilst there is uncertainty throughout the property market, many landlords are looking to invest in property in 2023. 45.15% of UK landlords say they think they’ll invest in property this year, which would be good news for the increasing number of renters looking for available property.
With the economy showing signs of recovery and new initiatives being implemented, it's possible that the rental market could become more secure by the end of 2023. Renters will have access to more flexible contracts, rent assistance programs, and tenant protections. However, landlords also need to be supported in order to encourage them to invest in the rental market. Only by ensuring that both sides of the equation are fairly represented can the UK achieve a secure and stable rental market.