Tenants are beginning to consider their next move as they anticipate the coronavirus lockdown easing, property website Zoopla has revealed.
Zoopla claims that demand for rental properties bounced back 30 per cent in the first two weeks of April.
This follows a 57 per cent decline over the last fortnight in March, due to the coronavirus outbreak and the introduction of the lockdown.
The figures were compiled using data from Hometrack and Zoopla.
Estate agents and lettings agents have shut their branches during the lockdown, as part of efforts to help halt the spread of the coronavirus.
And after the government advised against moving home, the rental market effectively closed – so landlords feeling uncertain about the rental market should welcome Zoopla’s figures.
Zoopla said that increased uncertainty means people looking for a home are turning to the rental market first – rather than the sales market – to meet more immediate housing needs.
This is largely in part due to the flexibility in the lettings market, which has allowed agents to agree rental contracts with delayed start dates and agree terms based on online viewings.
This has translated into activity continuing throughout the lockdown, albeit at a significantly lower rate, according to Zoopla.
Zoopla also suggested that once the lockdown eases, activity is likely to rise in the rental market quicker than the sales market.
This is because the average ‘time to let’ is less than three weeks in usual market conditions, compared to an average of three months to complete a sale.
Once lockdown restrictions ease, activity will likely rise and match the previous years’ levels in the second half of this year, Zoopla said.
It means that the total number of moves in the rental sector will be around 25 per cent lower this year than in 2019.
Zoopla’s Gráinne Gilmore said: “The flexibility of the rental market is one of the key factors that has allowed activity to bounce back more quickly than other parts of the property market.
“The rise in demand in the first two weeks in April indicates that some tenants are already mapping out their next move.
“As with the whole housing market however, activity levels and rental growth will likely be closely aligned to the economic landscape of the UK once the lockdown eases and the immediate impact of COVID-19 starts to recede.”
But she added: “If the responses to COVID-19 contribute to a rise in unemployment, as some official bodies have forecast, this will reduce the scope for any additional growth in rents.
“We expect growth to moderate this year, but to remain in positive territory.”
The Zoopla data suggests that rental properties priced between £500 and £600 a month are the most popular with tenants, consistent with pre-coronavirus data.
But it’s different in London, where there’s been a marginal shift in demand. Tenants are most interested in properties with rents of between £1,200 and £1,300 a month.
Compare this with February, when the greatest interest was in properties with rents of between £1,400 and £1,500 a month.
Zoopla said this could be partly attributed to a change in the financial circumstances of some tenants, although added it was ‘premature’ to conclude if this trend will persist.
The index also reveals that the annual rate of rental growth flattened in March, which reflects seasonal trends rather than ramifications of the coronavirus lockdown.
Rents were up 2.4 per cent on the year, compared to 2.5 per cent annual growth in February and 2.3 per cent recorded in December 2019.
Despite the slight slowdown in growth, rental growth has been on a largely upward trajectory since March 2017 amid increased demand and shrinking supply.
What do you think about the figures from Zoopla? Let us know in the comments below.
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