2023 may have felt like a mixed bag for many in the private rental sector and while an unstable economy may have put a degree of financial strain on some landlords, the rental market has been buoyant, offering plenty of opportunities for those willing to take them.
Despite economic challenges, there’s still plenty of good news for landlords when we look ahead. The rental market is set to continue thriving throughout 2024, and house prices are dropping, which could provide excellent opportunities for landlords who want to expand their property portfolios.
2024 will also be a pivotal year for legislative changes in the rental sector. The long-awaited Renter reform Bill should come into effect towards the end of the year, and landlords will need to plan and prepare for it accordingly. Watch out for further updates on this.
Here at Pure Lettings we’ve been busy peering into our crystal ball for what we feel the year ahead holds for landlords hopefully helping you plan and prepare effectively for the year ahead.
Landlords will face a complex financial landscape in 2024. The Bank of England has raised interest rates throughout 2023 due to soaring inflation. Market commentators seem to suggest that interest rates will remain high in the early part of 2024, with the UK struggling with weak economic growth and persistent inflation. Most experts however feel interest rates have peaked at 5.25% although the IMF has warned central banks against cutting interest rates too quickly. Long term however it seems unsustainable to keep rates as high as they are now, so as soon as inflation is back under control, the Bank should start to reduce interest rates. The annual inflation rate was 11.1% a year ago, which has now fallen to 4.5%. The Bank of England expects inflation to keep falling throughout 2024 so some analysts anticipating that the Bank of England could start cutting interest rates as soon as June. This should ease some financial pressure on landlords.
Demand has consistently outstripped supply in the rental market for the last few years. This has been caused by a perfect storm of factors, including a lack of new rental stock and landlords leaving the market due to challenging conditions. The unprecedented demand for rental property shows no sign of easing any time soon. High mortgage rates and the cost-of-living crisis have made buying unaffordable for many. According to Zoopla, as at November 2023, demand for rental properties was running 27% above the five-year average. This has led to a substantial increase in the price of rent. In fact, in November 2023, rents rose 10% for the 20th month in a row. Looking ahead in 2024 Zoopla predicts national rental growth will be 5-6% and even higher in the larger cities.
In conclusion therefore financially things are certainly looking up. Interest rates should come down and rents will continue to grow hopefully making 2024 a much better year in the Private Rented Sector. Do however keep an eye out for future updates and particularly as the Renters Reform Bill comes closer.
If anyone has any Landlord or tenant related matters then please do not hesitate to contact Lee Bilbrough – 01535 980060 or firstname.lastname@example.org