Buy-to-let investors may look to London and the South East for high rental income but a Welsh city has actually generated most demand this year, research suggests.
Analysis by Rightmove has revealed that Wrexham – made famous in recent years after its football team was backed by Deadpool star Ryan Reynolds - received the most enquiries on average for rental listings during 2023.
Rents have hit record levels this year due to a lack of supply, giving a boost to buy-to-let investors.
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Rightmove data shows tenant demand is 42% higher than at this time in 2019, while the number of available rental properties is 28% lower.
This is benefiting landlords as it means they can charge higher rents, although many buy-to-let investors are exiting the sector due to the scaling back of tax reliefs that are making property investment less profitable, especially as mortgage rates rise.
There are also warnings that rental growth could slow as tenants hit the limit of what they can afford to pay, while mortgage rates are slowly falling, which could help more renters get on the property ladder.
We reveal where demand has been highest for rental property during 2023.
The most popular areas for rental demand
London and the South East may typically be the most popular and most expensive regions for rentals but research by Rightmove shows Wrexham is this year’s busiest rental location.
The property website worked out levels of rental demand by measuring how many prospective tenants have phoned or emailed a letting agent to request to view a property to rent through its website. The analysis was carried out across 360 local authorities in Great Britain.
It found that each home available to rent in Wrexham attracted an average of 56 enquiries from prospective tenants.
This compares to just eight enquiries per property back in 2019, when Wrexham was in 55th position in the rankings.
Redbridge in London was the second most in demand area, with an average of 49 enquiries per available rental property compared with 11 in 2019.
Tameside in Greater Manchester was third, with an average of 48 enquiries compared with 14 in 2019.
|Average number of rental queries
Will rents rise or fall in 2024?
Rents have hit record levels this year.
The rises have been attributed to increased demand as high mortgage rates and house prices continue to lock potential first-time buyers out of the property market.
Across Great Britain, a typical rental home on the market received an average of 20 enquiries per property this year, compared with six in 2019, more than triple, Rightmove said.
However, there are signs that the balance between supply and demand will improve next year, which could push rents down.
The number of properties available to rent is now 11% higher annually, Rightmove said.
Meanwhile, the number of renters looking for a home and sending enquiries to estate agents is 12% lower than at this time in 2022.
Though the gap between supply and demand is improving, tenant demand is still 42% higher than at this time in 2019, and the number of available rental properties is 28% lower. This indicates it will take more time for the balance between supply and demand to reach the more normal market levels of 2019.
Over the past year newly advertised rents have increased by 10% outside London and by 6% in the capital, Rightmove said.
The property website forecasts a 5% increase by the end of 2024 outside of London, with a 3% increase in London.
“The increase in available homes for rents we’re seeing is likely to be a combination of some longer-term leases agreed during the pandemic years coming to an end, some new developments across the country being converted into rental homes, some landlords choosing to sell up, and also other landlords now returning who temporarily switched to the short-let market,” says Rightmove’s property expert Tim Bannister said:
“There are still far more renters looking to move than there are homes available which means we still expect rents to rise on average next year. But these early signs of a better balance of supply and demand means we predict rents will rise by a smaller figure of 5% next year, rather than another year of double-digit rental growth.”
Marc Shoffman is an award-winning freelance journalist specialising in business, personal finance and property. His work has appeared in print and online publications ranging from FT Business to The Times, Mail on Sunday and The i newspaper. He also co-presents the In For A Penny financial planning podcast.
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