UK rental sector remains robust after Q1 2018 recovery
The UK’s rental market has recovered in the first quarter of 2018 from a period of softening demand towards the end of 2017.
While the rent agreed on one bedroom apartments rose by 1.07% (relative to Q4 2017) and 1.42% for two bedroom apartments, the latest survey suggests even stronger demand for houses.
Average monthly rent rises across the UK for two-bedroom terraced (5.95%), three-bedroom semi-detached (5.08%) and three-bedroom terraced homes (4.82%) saw the biggest increases, driven by rental income rises in London and the South East.
The quarter on quarter increases in average UK rental returns mask regional market variations. The green shoots of demand are evident in London, with a return to rent increases following a brief period of rent deflation in 2017.
Regionally, East of England, North West and South West also experienced increased demand for flats and larger homes. In contrast, Wales, Yorkshire and the Humber, North East and West Midlands experience decreases in rental returns, particularly one and two bedroom apartments.
Jaedon Green, Leeds Building Society’s Director of Product and Distribution, said: “The report indicates the return of a robust rental market following a softening in demand in the final months of 2017, as landlords adapt their models to recent tax changes.
“A thriving private rental sector is essential to a healthy mix of housing tenures and many buy to let borrowers who choose to stay in the private rented sector have acted on previous calls to optimise their portfolio; adapting their approach in order to thrive in a more sophisticated rental economy. Not surprisingly, landlords are increasingly looking further afield in order to identify value and protect their returns, with regions such as the North West and East of England becoming increasingly attractive.
“It’s important that lenders and their intermediary partners continue to support landlords as part of a balanced approach to housing tenure. We continue to work hard to improve our service, simplify processes and develop innovative products which meet customer demand."
This information is for use by FCA authorised intermediaries only and must not be distributed to potential borrowers.
 All data from quarterly report for Q1 2018 by Landlords Panel study from BDRC Continental, undertaken in partnership with the National Landlords Association (NLA).
 Five property types measured were one bedroom flats, two bedroom flats, two bedroom terraced properties, three bedroom terraced properties and three bedroom semi-detached properties.