Residential Lettings - Outlook for 2022
Living room interior in loft, industrial style

Residential Lettings – Outlook for 2022

The supply squeeze in the rental market is expected to tighten during the early part of 2022. Supply will likely remain low in London and the Home Counties while demand surges thus keeping upward pressure on rents.

It has been well documented recently on how the UK residential sales market is on the road to some normality, and with supply, mortgage rates and overseas buyer numbers predicted to rise over the coming months it will be interesting to see how this develops.

The journey back to normality for the lettings market in London and the Home Counties is however likely to take longer.

Students and Corporate Tenants account for a large part of demand, which has got stronger over the last 12 months as offices and Universities re-opened.

Supply has been more erratic over the same period. It surged during the early days of the Covid-19 pandemic as properties that would otherwise be used for short-lets and ‘Airbnb’ staycations moved into the mid-long let markets.

As lockdown restrictions were relaxed and travel resumed, the ‘Airbnb’ operators switched back, meaning prospective tenants were suddenly caught up in a so-called dash for stock.

The stamp duty holiday in 2021 exacerbated the situation, with many landlords deciding to capitalise on the tax break by opting to sell.

After some jitters before Christmas when the Omicron variant first appeared, students and companies are now back seeking accommodations. Their problem is that rental supply remains tight.

Data released by Knight Frank recently shows the number of corporate relocation enquiries was five times higher in the final quarter of last year than it was in Q2 2020. The enquiries come from companies of all sizes looking to relocate staff to the UK across a range of sectors including finance, tech and energy.

There will also be a steadier flow of students looking for rental properties during the early part of 2022 than in previous years, which will accentuate this demand.

Demand from corporate tenants is expected to rise as spring approaches and companies that are activating or re-activating plans may find they are doing so at the same time as their peers.

“Everything is pointing towards a continued shortage of rental accommodation during the first half of 2022,” says Darren Haughton, Director of Property Services at CoreProp Group. “Any re-balancing between supply and demand will come later this year and as a result, rents are likely to keep rising”.

According to Knight Frank, average rents rose 2.9% in prime central London last year and we all forecast higher growth during 2022 . In prime outer London, rents increased by 3.7% in 2021.

Strong rental value growth will hopefully tempt landlords back into the market, which would help redress the balance and furthermore, while we expect sale values to increase this year, rising mortgage rates could see demand begin to fray. Together with rising supply, this is likely to put downwards pressure on prices, which means rental returns may start to look a little more attractive.

Further reading

The CoreProp Group – Valuation Service Pillars
The CoreProp Group – Valuation Service Pillars

Professional, reliable and low-cost services should be an industry standard, not a luxury...

Flexible working now part of work culture for over a third of people
Flexible working now part of work culture for over a third of people

UK workers and their bosses are reaping the benefits of flexible working, according to new research released by Microsoft.

What are the benefits of Serviced and Managed office spaces?
What are the benefits of Serviced and Managed office spaces?

Running a business is time-consuming and often quite stressful, so it makes sense that business owners would want to lighten their load as much as possible. This is where renting serviced and managed office spaces can provide all sorts of benefits.

We’d love to hear from you

Please get in touch