Rental demand increases, led by south coast

The latest Rental Demand Index from estate and lettings agent, Barrows and Forrester, has revealed that rental demand has surged during the third quarter of 2023, with a surprisingly strong element of this growth coming from regions in the South East, like West Sussex and Hampshire.

The Rental Demand Index by Barrows and Forrester is a quarterly review of tenant activity, analysing rental demand based on the proportion of total rental market listings that have already had a let agreed. 

The latest index shows that across England some 39.8% of rental stock has been snapped up by tenants in the third quarter of 2023, rising by 4.1% from the second quarter, when 35.7% of stock was rented.

However demand for rental property was fiercer last year, when it stood at 46.0%, 6.2% higher than current levels.

Hottest rental demand spots

West Sussex in the South East – known for its coastline and picturesque villages – is the most in-demand region of England, where 56.5% of landlords who list properties have already reached an agreement with renters.

Bristol ranks as the second most in demand rental market at present, where 55.5% of properties have already been let.

Northamptonshire sits third with rental demand at 55%, with Bedfordshire, Hertfordshire, Somerset, Buckinghamshire, Hampshire, Essex and Cambridgeshire also amongst the most in demand rental markets.

Weak demand in London

Surprisingly, given that you associate the capital with such a struggle to secure a rental property, Greater London is registering below-average rental demand, at 32.6%. 

What is more, the Prime region of the City of London has the weakest demand across the whole of England, at 28.6%.

Quarterly growth spots

Leicestershire is the fastest growing region among renters, where demand increased by 10.6% between the second and third quarters. This growth is coming from a low base however, as only 34.3% of homes have been rented, lower than the national average.

It’s a similar trend with West Yorkshire, where growth of 9.0% brings it up to 35.2%, while in Tyne and Wear strong quarterly growth of 10.3% has pushed demand up to a significant 48.1%.

At the other end of the spectrum demand has dropped off the most in the Isle of Wight (-16.4%), Rutland (-12.1%) and Dorset (-11.4%).

Annual Look

Lancashire has seen the biggest surge in interest from tenants since last year, rising by 7.4% to 39.0%, which is around the national average.

Again, Leicester is a growth area, at 6.6%, followed by Worcestershire, at 6.0%, bringing demand to 34.3% and 48.4% respectively.

At the other end of the spectrum demand dropped year-on-year in the City of London (-16.8%), Nottinghamshire (-15.9%), and Greater London (-11.3%). Tenants in those regions are likely in better positions to be more choosy about the properties they rent.

Managing Director of Barrows and Forrester, James Forrester, comments: “Tenant activity is showing no signs of slowing down, which is reassuring news for the nation’s landlords who should be able to avoid lengthy void periods between tenancies as a result. 

“What’s striking is demand is stronger outside of London, as properties in south coast areas like West Sussex are being rented out like hotcakes.

“Clearly a high number of tenants are still prioritising green space and having access to the coast, from which you can draw a number of conclusions. 

“Tenants could be looking for more value away from major cities in commuter towns, more could be taking advantage of the post-pandemic work from home culture, while older tenants could be moving to areas more suitable for their needs, where they’re better placed to start a family.

“Regardless of the reasons, it’s encouraging that demand is rebalancing away from the capital and becoming more evenly distributed across England.”