Rental Supply is down as Birmingham Rental Demand Explodes
Rental supply is down; there are now five percent fewer homes to let than there were two years ago, according to the Countrywide rental index.
Since April 2016 – when changes were made to the stamp duty surcharge for additional properties – rental supply has remained strong in the North despite falling in the South. There are currently 19% more homes available to rent in the North than in 2016, compared to 16% fewer homes available to rent in the South.
This fall in available homes to rent throughout the South could be a result of longer tenancy lengths as more tenants ‘put down roots’ and enjoy the opportunities afforded to them on their doorstep. However, this decline cannot be ignored when compared to the northern markets.
Despite this level of resilience, areas such as Birmingham and Manchester are still experiencing residential undersupply as demand continues to skyrocket. Between 2011 and 2016 for example, around 8,000 homes were completed in Birmingham whereas demand was closer to 20,000.
With Birmingham’s population forecast to rise by 171,000 to a total of 1.3 million people by 2039, experts are predicting a need for nearly 100,000 additional households over the next 20 years.
This translates into a huge number of tenants looking for rental opportunities, particularly as city centre living grows in popularity. As regional cities make improvements to their infrastructure and commercial offerings, more people are moving to take advantage.
Another driving force of the UK housing crisis is the issue of empty homes. The number has risen for the first time in 10 years and now makes up around £50bn worth of the country’s stock.
Seeing a growth of 2.6% over the past year, the number of empty homes in the UK now sits at around 205,293 as per a report by HouseSimple.
Looking at specific locations, London has the highest percentage of the share, with 20,237 vacant properties. Birmingham comes second with 4,280, Bradford with 3,931 and Liverpool with 3,889.
While there’s no specific cause of this issue, so called ‘buy-to-leave’ landlords are a major contributor. This concept involves buying a property and leaving it empty while waiting for the value to increase before selling on. Councils are already imposing higher rates of council tax on owners that let property sit vacant for a certain amount of time but it’s still a large share of the market.
Government plans were also announced earlier in the year to relax planning rules regarding making use of land that has already been built on. By converting empty shops into residential property and allowing homeowners to extend their properties, Theresa May described how cities can “make better use of brownfield sites, building upwards rather than outwards.
“Our new planning rules make it easier to do this, allowing for minimum densities around transport hubs and city centres so that more homes can be built in areas with the highest demand”.
As projects such as HS2 edge closer to completion and people continue to leave London for the Midlands and the North, the demand will only increase. The question is whether residential supply can rise to meet it.