The cheapest end of the rental market is undersupplied and overly competitive, as just 1.9% of the UK’s rentals are priced under £500 per month, while tenant demand in this price range is the highest in the market.
The research comes from Zero Deposit, the tenancy deposit alternative, which analysed current rental market stock at each rental price band, looking at the proportion of homes available at each price threshold, as well as the demand for these homes based on the number of total homes that have already had a let agreed.
The figures show that just 1.9% of current rental market stock is listed at an asking rent below £500. This is by far the lowest level of stock of all rental market price bands analysed by Zero Deposit, highlighting that those with the smallest budgets face by far the toughest task when it comes to finding a rental property they can afford, let alone securing it.
However, it’s not just the issue of stock supply that is severely restricting tenant choice at the most affordable end of the rental market, but also an extremely high level of competition. The figures from Zero Deposit show that over three quarters (76.2%) of stock currently available on the market has already been marked as let agreed, the highest level of tenant demand of all price thresholds.
Middle of the market not quite as competitive
For those that are able to boost their rental market budget, the middle of the rental market remains competitive, however, demand is lower for properties with asking rents of between £500 and £2,000 per month, while stock levels are also more robust.
Some 26.1% of the UK’s stock costs between £500 to £1,000 per month, while 53.0% of rentals are already snapped up, meaning around half of stock remains available.
It’s a similar situation between £1,000 and £1,500, which accounts for 22.1% of the UK’s stock, while 52.4% of homes are snapped up.
At the more expensive range of £1,500 to £2,000 supply is lower, at 16.1% of stock, while demand is slightly higher, at 57.9%. This still represents a reasonably healthy balance between supply and demand.
Top end of the market competitive
Demand for rentals is especially strong at the top end of the market, for tenants able to spend £2,000+ per month.
Indeed, three quarters (75.2%) of these properties have already been let, so quality properties are let fast.
That said, there’s also plenty of supply when it comes to these property types, as 33.9% of all rentals are in the £2000+ bracket, signalling that there’s a growing prime rental market developing across the UK.
Sam Reynolds, CEO of Zero Deposit commented:
“Tenants searching for the most affordable rental properties are facing an insurmountable task, as there’s a real shortage of affordable stock and these properties are being snapped up quickly when they do reach the market.
It’s this market segment that is being forced to heavily compromise on their next home while being under considerable financial pressure to fund the move.
Of course, it still remains a challenge for those who are willing or able to spend more, but supply and demand are more equally weighted at the mid-range of the market.
However, many tenants simply don’t have the luxury of splashing out more on the cost of renting as they are already struggling to secure even the most affordable rentals.”
