Year on year demand has leapt as the volume of people looking to buy has slumped in recent months
The number of people asking about homes to rent is up 23% on this time last year, according to estate agent giant Rightmove.
It found the total number of homemovers looking to rent or buy is just 1% less than last year, as far fewer are looking to buy.
Forty-two per cent of first-time buyers who have got a deposit saved are waiting to see if mortgage rates drop, respondents to a survey showed. Earlier this month Rightmove reported that demand for homes to buy was 20% lower than a year ago, with house prices dropping 1.1% in the last month.
Rightmove suggested its latest data meant “aspiring buyers [are] looking at the rental market as a short-term alternative while they wait to see where mortgage rates will go”.
Tim Bannister, property expert at the company, said it was “completely understandable” that some buyers, particularly first-time buyers, were “waiting for some more financial certainty”. Although, he suggested that buyers might soon start to be interested in buying again.
“Now that there are signs that mortgage rates are settling down, the indicators are that they will stabilise at a higher level than previous buyers had been used to.”
Rightmove said agents were managing 36 enquiries per property on average but there were 4% fewer rental homes on the market than last year. “So choice is limited,” the agent said.
“First-time buyers are likely to find competition for a suitable rental home much fiercer than in the sales market,” it added.
The news will be welcome for build to rent developers, many of whom have been hit by rising borrowing costs in recent weeks which have stalled some deals, with build to rent developers Watkin Jones and Telford both announcing redundancies. However, the competition is likely to drive rents higher, with calls from London mayor Sadiq Khan in recent days for a Scottish-style rent freeze, a policy which has seen investment north of the border fall.
First-time buyers might return to the sales market when mortgage rates settle and after the Autumn budget last week guaranteed stamp duty savings until 2025.
The first-time buyer market is expected to be particularly affected by the end of the government’s equity loan scheme, Help to Buy, for which applications had to be submitted at the end of last month and ends in March next year. The scheme has mainly helped first-time buyers, and has been exclusively for first-time buyers since April last year.
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