What’s Happening in the Rental Market? 

Stuart Marshall argues that the rental industry is currently booming. "This is helping UK expat and foreign national mortgage holders make enormous profits." There are several causes for this, but one of the primary ones is a discrepancy between the supply and demand for real estate. Zoopla reports that while the supply of available houses is 43% lower than the five-year average, demand is 43% greater. Rent outside of London currently costs an average of £809 per month, which is the highest level in 13 years due to this gap between supply and demand. Additionally, a 4.5% increase in rent is anticipated for 2022. 

Stuart Marshall argues that the rental industry is currently booming. "This is helping UK expat and foreign national mortgage holders make enormous profits." There are several causes for this, but one of the primary ones is a discrepancy between the supply and demand for real estate. Zoopla reports that while the supply of available houses is 43% lower than the five-year average, demand is 43% greater. Rent outside of London currently costs an average of £809 per month, which is the highest level in 13 years due to this gap between supply and demand. Additionally, a 4.5% increase in rent is anticipated for 2022. 

Even room rents have increased quickly in recent years due to the intense competition for rental properties, jumping 8.4% just in January. The average cost of a room in January 2020 exceeded the pre-pandemic high of £622pcm, which is the fastest growth rate in rooms in the past two years. With fewer rooms available to rent than at this time last year, room rental increase is also anticipated to continue. ‘With such strong rental growth, it’s an excellent time to utilise a UK expat or foreign national mortgage to secure a slice of the highly lucrative UK rental market.’ 

Restored Rental Markets in the City 

The revival of city centre markets is another factor that has a significant impact on the rental market's growth. As workplaces resume some level of normalcy, the transition to post-pandemic life has facilitated travel and restored confidence to many towards city living. As a result, according to Savills, city centre rental prices experienced their highest six-month performance in seven years in the second half of 2021. The demand that developed for rental houses in commuter zones diminished after work and social scenes returned to city centres, which is why major cities are benefiting the most from the increase in rental prices. In consequence, rental increase was 9.7% year over year in inner Manchester, 9.6% in inner Birmingham, and 9.7% in inner Leeds. 

"Rental growth has also been exceptionally strong in the capital, with annual rent rise 10.3% greater than the prior year." The significant decline in capital rents during the pandemic and the subsequent rebound in London rentals since the return of office-based working and city living are the main causes of this strong capital rent growth. 

Rent Growth's Foreseeable Future.

It is within today's society that there is a demand, higher than ever for student properties and temporary accommodation for those traveling due to work. And so, HMOs and Air BnB properties are required. Through the exploration of these avenues, a higher income and yield will become evident for the investor.

Reduce the cost of the property relative to the rental revenue.

As always, it's impossible to say for sure how the rental market will behave throughout the remainder of 2022. However, as was already said, a further 4.5% increase in rent is expected in 2022. ‘Rental increase is all but certain if the supply of rental properties in the first half of the year is any indication of trends that will emerge in the second half of the year. In comparison to the normal January 2022 start of the year, there were 39% fewer houses available for rent. This is somewhat attributable to the phenomenal 76% increase in demand, but there has also been a 15% decrease in the flow of new rental housing supply. Due to this circumstance, the rental market is moving quickly; currently, it takes residences 14 days on average to be rented out, as opposed to 21 days towards the end of 2020. 

Returns for current UK expat and international mortgage holders will increase as prices soar as a result of demand. Renters now pay an average of £969 per month due to the 76% increase in demand in the New Year that has increased rental prices. When compared to the beginning of the epidemic, this average has increased by £62 per month (or £744 annually), while the final three months of 2021 saw an 8.3% increase. Furthermore, according to property marketplace Zoopla, private tenants now pay 31% of their monthly household income for rent. Owner-occupiers spend only 18% of their monthly income on housing, in contrast. 

‘Given the data we currently have, it seems likely that 2022 will remain to be a very profitable year for those with UK expat or foreign national mortgages who own rental properties in the UK.’ 

The Results

"Now is a perfect time to get a mortgage from a UK expat or foreign national to buy an investment property in the UK." Because there is such a strong demand and a small supply, current investors are earning tremendous profits. There are several UK expat and foreign national mortgages available for potential investors to take advantage of the current circumstances. Due to the state of the business, there is also little competition from domestic investors. Rising prices, interest rates, and harsher laws have all contributed to a decline in domestic investor confidence. Many domestic investors are not equipped to ensure that their properties are up to code in a risky environment where mortgage rates are likely to climb, and the cost of living is rising because of the impending regulations around EPC ratings.” 

The effect that rising rents will have on the capital value of properties is another reason to invest right now. In 2022, house prices rose at their quickest rate in January in 17 years, according to Nationwide, which reported an 11.2% year-over-year increase. 

'In short, UK expat and foreign national landlords are likely to witness quick lets, decreased vacant periods, and high demand for the suitable property due to the present market conditions. For those investing with a UK expat or foreign national mortgage, 2022 will only see greater rental growth as a result of people returning to their jobs and schools and the relaxation of travel restrictions.’