If you’re a UK buy-to-let property investor, you’re probably paying attention to the latest news on the UK rental market. According to recent reports, rental prices are increasing in 2023, private rental prices paid by tenants in the UK rose by 4.7% in the 12 months to February 2023, up from 4.4% in the 12 months to January 2023.
Rising Demand for Rental Properties
There are several factors that are contributing to the achieved and expected rental price increases in 2023. One of the main factors is the increasing demand for rental properties, particularly in urban areas. As more people move to cities for work and other opportunities, the demand for rental properties is likely to increase, which will drive up prices.
Manchester, in particular, was recently voted the 3rd best city to live in in the UK. The city also experienced the highest growth rate in the UK over the past 5 years of 16.4%, with students, professionals and families all flocking to the centre. Furthermore, the city centre population is forecast to grow by a further 10% by 2025 (source).
With rising interest rates being a discussion point amongst our investors, continued rental rate increases off-set any interest rate growth in the present period until BoE reduces interest rates down in the end quarter of 2023 as per their plans and proposals for 2023.
What This Means for Buy-to-Let Property Investors
Rising rental prices is the potential for increased cash flow and income by landlords applying rental rate increases. Increases can help offset any expenses associated with owning and maintaining the property, in addition to offsetting the increased mortgage payment costs due to interest rate increases recently. Additionally, for those without mortgaged investments, higher rental income can provide a greater profit for secondary income or a greater cushion for investors in the event of unexpected expenses or vacancies in the future.
Overall, the news that rental prices are continuing to increase in the UK rental market in 2023 is great news for buy-to-let property investors. While the expected price increases could be good news for your investment portfolio, it’s important to remember that they could also make it more difficult to find tenants and this is where careful consideration on each property purchase is wise. Selecting a property with unique features like a balcony, a private roof terrace, a corner position or dual aspect can be what sets your property apart from other similar properties in the same price range.
As always, it’s important to stay up-to-date on the latest news and trends in the rental market to make informed decisions about your investments. To discuss property investments in high growth areas, those developments with unique amenities and services that set it apart and those with high tenant demand – speak with a member of the TK Property Group team.
