Shorter days and smaller BTL properties

The most recent analysis in Resolution Foundation’s Housing Outlook Q3 2022, finds that the average floor space per private renter in England has declined by almost one-fifth over 20 years, from 43m² in 1996-2001, to 36m² in 2017-19. If private renters enjoyed homes as spacious as they did two decades ago, in order to accommodate them all, we’d need to find additional floor space equivalent to the size of Nottingham.[1]

According to Zoopla’s quarterly Rental Market Report, as renters feel the cost-of-living squeeze, there’s also been a rise in demand for one and two-bed flats, and there are fewer renters looking for two and three-bed houses. These renters are being pushed towards smaller properties and lower running costs due to higher rents as well as rising living costs including energy prices. [2]

They go on to say, although rental growth may be showing the beginnings of peaking at current levels, it has accelerated over the last 12 months – from less than 2% in July 2021 to 12.3% today. In particular contrast to circumstances surrounding the pandemic, strong employment growth has driven demand in the cities and there’s been a 10.5% rental growth in urban markets ahead of 8.5% in rural markets.

As well as growth in cities, the latest research from the Stripe Property Group indicates buy to let landlords can find strong rental yields in locations close to a university. Properties in close proximity are on average 1.3% higher than rental yields in the nearby area, which could boost a landlord’s annual returns by almost £6,000.[3]

Whatever size rental property or location you’re looking to invest in, it’s important to make sure you find a lender who understands your changing needs and has experience with a wide-range of buy to let scenarios.