Rental demand drops as tenants tackle the cost of living crisis

Research from estate and lettings agent, Barrows and Forrester, has revealed that tenant demand has started to fall across England’s rental market, with demand down by as much as -29% in some parts of the country.

The Barrows and Forrester Rental Demand Index monitors rental listings across the nation, taking an average demand score for each English county based on the number of properties already let as a percentage of all rental listings, highlighting where demand for rental homes is at its highest.

Rental demand across England is currently sitting at 33.9% after a quarterly drop of -12% between Q3 and Q4 of last year.

With a decline of -28.9%, the City of Bristol has reported the most significant rental demand drop, followed by Nottinghamshire (-21.5%), the City of London (-20%), West Yorkshire (-18.7%), and Greater Manchester (-18.5%).

Some parts of England have, however, experienced demand growth in the past quarter, none more so than Durham where it has increased by 12%.

Demand on the Isle of Wight has increased by 3.5%, and it’s a 1.9% boost for both Shropshire and Essex.

These are the only parts of the country to report an increase in rental demand.

England’s current rental demand hotspot is West Sussex where demand for rental properties sits at 56.1%.

This is followed by Bedfordshire (54.4%), Essex (54%), Bath & North East Somerset (51.5%), and Dorset (51.5%).

Meanwhile, demand is at its lowest in the West Midlands (19%), Leicestershire (20.8%), and West Yorkshire (21.3%).

Managing Director of Barrows and Forrester, James Forrester, commented: “Rental demand is down across all but four areas of England and the rising cost of living and surging energy prices will be playing a significant part in this decline.

“Tenants are fully aware that landlords are seeing their own expenses rise, not least mortgage payments, and are passing these increasing costs to their tenants. As such, renters are choosing to stay put at the moment with tenancy agreements that were signed before the current economic crisis instead of exposing themselves to a market where prices are likely to get higher and higher.

“As the cost of living crisis eases, whenever that might be, rental demand will certainly increase. But for now, tenants are staying put.”