Between 2020 and 2022, demand for properties in the UK far exceeded supply. This drove rents to unprecedented levels.
Here in the southwest, for example, the average rent has risen from £913 per calendar month (PCM) in 2016 to £1,339 PCM year to date in 2024.
Despite this, the last 12 months have seen a slight increase in the number of properties available for rent, both nationally and regionally. This is lending to a more balanced market. This article will explore these trends and see if the same is happening within Bath.
NATIONAL AND REGIONAL TRENDS IN BY-TO-LET:
Nationally, the rental market has witnessed a notable shift in the last 12 months. During the pandemic, many factors contributed to the surge in rental prices. There was a migration of people seeking a larger living space and avoiding the disruption of new housing developments. As restrictions eased, the rental market began to show signs of stabilisation. In a bid to help mellow the rising rental prices, there has been a slight uptick in the supply of rental properties.
In April of 2023, the average rent achieved for a new UK rental property was £1,641pcm. By April of 2024, this has increased by 8% to £1,772pcm.
This is a positive sign for rental prices levelling out, as only 12/18 months ago, the increase was in the mid to late teens.
The southwest continues to be ahead in this national trend of rent increases. In April of 2023, the average rent of a new property coming to the market was £1,166pcm. This increased 12.3% in April of 2024, to £1,309pcm.
The increased supply of rental properties has brought relief to tenants, who had been grappling with 20%+ increases in rent per annum for some types of properties over the last few years.
So, landlords, what does this mean for you?
Despite this rise in supply, the demand for rental properties continues to remain very robust. This ensures that yields continue to be attractive for landlords.
THE BATH RENTAL MARKET:
On a local level then what is going on?
Well, a similar trajectory can be seen here in Bath. Post-pandemic, rents have been surging due to that imbalance in supply and demand for rental properties.
For this analysis, we are looking at the first four months of 2023, versus the first four months of 2024. In 2023, 1,227 properties came to market in the Bath area (For this the postcodes are BA1/2) and attained an average rental value of £1,684pcm.
IN THE FIRST FOUR MONTHS OF 2024, 1,158 PROPERTIES HAVE COME ONTO THE RENTAL MARKET ACHIEVING AN AVERAGE RENTAL VALUE OF £1,860PCM, A RISE IN RENT OF 10.5%.
So, for landlords present and future, is buy-to-let a savvy scheme to invest in, in 2024?
Despite recent market adjustments, Bath remains a compelling investment for several reasons. They are as follows:
- Strong Rental Demand:
Bath’s rental market continues to benefit from strong demand. The city’s attractive location, good transport links, and quality of life make it a desirable place to live, ensuring a steady stream of potential tenants.
- Affordable Property Prices:
Compared to other regions, Bath offers a relatively affordable price. This combined with solid rental yields and long-term, stable, capital growth, makes it an appealing option for buy-to-let investors.
- Economic Growth and Development:
Bath continues to experience solid economic growth. Ongoing developments within infrastructure and amenities are not only increasing the quality of life for residents but it is also boosting the rental market by attracting more people to the area.
- Long-Term Investment Potential:
Recent stabilisation in the rental market suggests a move towards long-term stability. For landlords, this means the potential for consistent long-term rental income and growth over time.
WHAT ABOUT OUR TENANTS IN ALL OF THIS?
Tenants may be feeling concerned about all of this. Burdened by the recent increases in rent, it is important to note that these rent rises have aligned with the rise in inflation over the medium term since 2016. So, in real terms, the cost of renting has not disproportionately increased. However, some tenants are still continuing to struggle due to a lack of rise in wage rates.
There is a glimmer of hope for those tenants wishing for a more balanced market and reduced rate of rent. With more supply leading to more opportunities for renters to find a home that suits their needs and their budgets, it is likely there is more place for tenants to get their rent down.
THE FUTURE OUTLOOK FOR BUY-TO-LET IN BATH:
Looking ahead, the market here in Bath appears poised for continued growth and stability. This is due to the combination of strong demand, affordable prices, and the city’s continued economic growth. Mixing this all together leads to Bath remaining a valuable investment opportunity for potential Landlords.
Now is an opportune time for those sitting on the fence about the buy-to-let market to enter. The local and national stability of rental prices indicates a mature and sustainable market that has reduced risk and volatility.
