Now that 2022 is upon what does the rental market look like for 2022? We look ahead to what the year holds for the residential rental market with anticipation.
The nation is still gripped by the uncertainty of Covid and what ramifications it has for the economy in general as we tackle the latest Omicron variant. The country was plunged into a national lockdown in March 2020 and we are still feeling the shockwaves to this day.
So what’s in store for the rental market?
Without the use of a crystal ball we have to approach any prediction with caution; after all these are unpredictable times we live in and has changed the way we live and work for good it would seem.
In December just gone the Bank of England has raised interest rates to 0.25% from a low of 0.1% to help tackle the increasing threat of inflation which could hamper the recovery of the UK economy. In some ways a perfect storm is looming in terms of higher costs for businesses and households on one hand and insatiable consumer demand on the other. If the economy can’t adapt effectively and pretty smartish this will indeed show itself in the double-digit inflation territory which we haven’t seen for quite some time. Add to the mix the Bank of England’s QE (quantitative easing) programme then you’ve certainly got a recipe for some challenging times ahead.
Workers will undoubtedly want their wages to keep up with inflation, which puts further pressure on costs and so companies will want to pass on to the consumer in the form of higher prices to preserve their profit margins. You can see where this is going. Coupled with a staff shortage the labour market is becoming somewhat fragmented. We still haven’t fully discovered the after-effects of the furlough scheme on jobs numbers.
In terms of the UK property sales market this continues to be buoyant due to the various stimulus packages over the course of the last 18 months or so. You can expect to see some cooling off in this market as interest rate hikes looking increasingly likely from their current rate and consumer confidence may begin to wane as they see their household incomes squeezed by rampant increases in energy costs and the NI (National Insurance) uplift in April.
The crunch question therefore is what about the rental market. Rents continue to be on an upward trend as there continues to be a shortage of stock with multiple interested parties for each property that is listed. It’s almost as though renters are “trapped” in their current property as there is very little comparable choice out there. You’ve got to realise that the rental market is somewhat perennial in nature as it can weather the storm of an economic downturn as at the end of the day everyone needs a roof over their head. With demand outstripping supply it has never been a better time to be a landlord, particularly as rents are more than keeping up with inflation. If you buy the right property at the right price in the right area you will always have tenant demand to fulfil your investment objective.
So from an investment point of view buy-to-let is a reliable vehicle as it is dynamic and robust in the face of changing economic landscape. Yes there may be barriers to entry and what seems ever-changing legislation but with the right advice it continues to yield the rewards.
So have a word with us at Belvoir who can advise you on the right investment for your property portfolio.
