As we flagged last month, we expected to see the growth in rental pricing slow. In fact we have seen a fall in London rental levels from an
average of £2,261 last month to an average of £2,219 in March.

This is a 2% fall and means that rental growth over the last three months is now only 2%. Even year-on-year growth is now just 4.1%.
The significant fall in number of viewing requests per property seen last month was maintained, with only 45 requests per property, compared with 66 at the same time last year. The other key
forward indicator, namely the number of properties being marketed at 10% over market value, was just 6%. The number of landlords pricing at any amount above market levels has fallen to just 30%, with 70% of landlords now pricing at or below market levels.

This is not surprising as we have been warning landlords that tenants have reached unsustainable levels of rent affordability, as salaries have failed to keep pace with rising rent levels over the last few years.**  

March Insight Data inc areas

We are increasingly concerned that the previously manageable
increases in mortgage costs for Buy to Let Landlords are about to
represent a significant challenge. Landlords managing increasing interest rates have so far largely managed to offset that increase with higher rents. However, the plateauing rent levels means increasing rents to mitigate increased mortgage costs is becoming much more challenging, if not impossible.

With 40%* of mortgaged landlords having to renew their mortgage in
the next year, this promises to create a significant issue for the rental
market. Buy-to-let (BTL) mortgage rates may be about to fall, but even the most ambitious don't expect that to happen fast enough for the large numbers of landlords who will have to renew their mortgage deals this year. Rates will remain considerably higher than a couple of years ago, which means landlords due to remortgage will face much higher repayments.

The same research suggested 30% of landlords said they planned to
increase the rent of their property, with 23% already budgeting for an
increase to mitigate increased mortgage costs. This promises to put
landlords between a rock and a hard place with increased costs, but no way of mitigating them in a falling rent environment.
* The Mortgage Lender Research (TML)

Pic Zoopla

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Richard Jenkins, Co-Founder & CEO, Hello Neighbour

Download the full report here:
Hello Neighbour | Lettings Insight Report | March 2024