Boom or Bust?
Smarter Rent’s 5 property predictions for 2023...
Between skyrocketing mortgage rates and forecast house price dips for some parts of the UK, buy-to-let landlords are naturally anxious.
But, with every challenge there is opportunity. Here are our top five predictions for 2023:
1. High rental demand will continue
There has been a 40% decrease in rental listings year on year, while the number of people looking to rent is 142% higher than five years ago.
Rising taxes and increasing property regulations have led to more buy-to-let landlords leaving the market.
With this disparity between supply and demand set to continue, competition for rental units is likely to remain high.
“These figures should provide some reassurance to landlords questioning whether they should stick or sell. There is a reliable pool of renters, particularly in commuter towns, willing to pay for a quality home” Alex Sullivan of Smarter Rent comments.
“We are experiencing occupancy rates of 95%+, with some properties hitting 100%, and don’t see any signs of this slowing down next year.”
2. Tenants will renew their tenancies
Along with high demand, renters are also expected to renew tenancies, providing further security to landlords.
Renters now stay in their property for an average of 4.3 years, increasing to 17.5 for those over 75s.
Predicted rent rises of 4% in January 2023 and a lack of supply will likely mean renters stay put for at least 12 months.
Equally, there has been significant demand for Airbnb-style lets, rising 600% in some areas from 2015 to 2021.
“There’s an underserved market of people needing Airbnb-style flexible rentals for 1-12 months - for example, if they’re working in a new area or between housing transactions. These renters are willing to pay double to have a well-equipped home while also being reliable and trustworthy tenants.”
3. Landlords who put renters first will reap greater returns
With rising mortgage rates, possible rent freezes and EPC changes on their way, it’s forecast that one in five buy-to-let landlords will leave the market. This creates an opportunity for those who are willing to invest in their property.
“At Smarter Rent we take a renter-first approach” Alex explains.
“Most landlords replace a carpet and add a fresh lick of paint, but this alone doesn’t maximise returns. Instead, we look at each house individually, determine the type of renter who’d stay there and kit the property out accordingly.
We have a concierge team on hand 24/7/365 should issues occur. Renters are willing to pay for this level of comfort and service and the upfront cost is quickly earned back. Our owners typically get 30-50% more in their pockets versus traditional agents”.
4. Demand for rental accommodation in commuter areas will continue
While the pandemic and shift to home and hybrid working have led to much prioritising of square footage and green space, this pattern of moving from the city to commuter towns has been present for many years.
Providing good schools, travel connections, plenty of space and a sense of community, the home counties continue to attract families and those wanting to escape the hustle and bustle of the city.
In fact, house prices in the home counties have risen at a higher rate than in London since 2010.
5. Property will continue to be a safe home for money
The predicted dip in prices will give investors, particularly those with cash, opportunities to secure property with less competition.
Over 50% of investors plan to invest in 2023 and Smarter Rent is already securing properties at 15% below market value.
For those who already own a property, Savills have forecast a 12% compound growth over the next five years, indicating that property remains a stable investment and reliable asset class.
It’s also worth being wary of media hype. Headline-grabbing claims of a market correction are incredibly broad.
Looking at 2008 data, properties were affected based on type and location with some smaller areas escaping the impact of the crash.
This is particularly true for areas outside of cities. Their rural charm combined with a lack of development space means they continue to demand an average premium of 13% compared with neighbouring towns.
Should I stick or twist?
Whether you’re a homeowner with a property you’re looking to rent out, or an investor wanting to source the perfect property, you can speak to us today on the below details.
Smarter Rent is a property specialist operating in Surrey, Berkshire and South West London. They source, refurbish and fully manage homes, getting their clients on average 30% more cash in their pockets.
Alex Sullivan,
Director of Smarter Rent
