Does more homes on the rental market, mean opportunities for landlords?

More and more properties are being put up for rent, according to reports released this month.

Some brief stats, as seen in This Is Money:

• According to Connells, the number of rental homes has increased 8% since March
• Estate agent Hamptons have also seen a 17% increase on homes in the rental market compared to this time last year
• Chestertons reported a 39% increase in rental properties in London

So what’s been going on? The story of the last few months has been of landlords wanting out and selling up.

To an extent, that is still true, and the same week this story came out there were others saying landlords were exiting the market.

We’ve all learned to be wary of declarations of boom or bust in the market over the past year, though, and as always, what these findings show is the market is much more complex, with lots of factors influencing individual decisions.

WHY ARE THE NUMBER OF RENTAL PROPERTIES GOING UP?

The prevailing logic is that homeowners struggling to sell their home are turning to putting it on the rental market, likely remortgaging their property as a Buy-to-Let to use the funds to purchase their next home.

This is, of course, nothing new, plenty of homeowners have entered the landlord market this way, what might be a surprise here is the volume of people doing it as we face a challenging market for house sales and higher residential mortgage rates.

WHAT DOES THIS MEAN FOR PORTFOLIO AND EXISTING LANDLORDS?

Demand for rental properties still outstrips supply, so while this new influx of stock may lead to localised reductions in monthly rent, it won’t be enough to support tenants across the country or give landlords the reliable returns they’ve expected.

What this does highlight however is two things:

• Keen home sellers may present an opportunity to ambitious landlords looking to expand their portfolios, as the challenges in the residential market make it a buyer’s environment
• In an expanding market, quality and experience will stand out as new landlords enter without necessarily a history of success

As ever, finding a solution that is best for tenants will always be best for landlords, so that should be the focus throughout the changing market, but what it does show is if more people are seeing reasons to enter the rental market, we should continue to maintain faith in it despite the doom and gloom stories around elsewhere.