The supply demand imbalance in the UK residential rental market has been in sharp focus over the past eighteen months. Average rents across the country continue to reach record highs, with annual growth at 10% in September 2023. Most will have been keeping a close eye on the RICS survey each month; tracking the views of property professionals on the sales and lettings market. The latest survey shows the majority of agents reported a continued rise in tenant demand, with another spike from June to July. A spike between June and July, as university students return to cities and graduates begin new jobs.

JLL analysis of Rightmove rental listings shows 97% of local authorities across England, Scotland and Wales saw fewer listings this year compared to 2019. Rental listings during the most recent full quarter, Q2 2023, were 12% lower compared to the five-year average.

Rightmove Q2 2023 data highlights homes are continuing to let quickly, with the average property to rent finding a tenant in just 17 days; the fastest since November 2022. Rightmove has also reported an average of 25 tenants requesting to view each property, a huge jump from just 6 pre-pandemic.

There has been an increase in tenants renewing their leases too. This has meant there has been a slower churn of rental properties coming onto the market. Rightmove data has shown that most landlords are reporting tenants remaining in their properties for 24 months or longer.

Students living in the Private Rented Sector (PRS)

The latest UCAS figures for applications and acceptances suggest that 415,000 applicants gained a place at college or university this year across the UK. Most will have hoped for a place in university or private purpose-built student accommodation (PBSA), but an undersupply of PBSA means that this is not always the case.

Analysis by Karl Tomusk in the JLL Living Research Team shows that PBSA nationally has the capacity to house 31% of full-time students, down from 33% in 2019/20. But growth in new students has been outpacing growth in new student beds by a factor of seven since 2019/20. Consequently, this means the private rented sector (PRS) continues to take the strain for students who are unable to secure a PBSA bed.

Student demand for privately rented homes means in certain locations students make up 40% of households renting privately. JLL analysis of council tax data shows that student households exempt from paying council tax make up 40% of PRS households in Exeter and Nottingham.

Top 25 Local Authorities by proportion of PRS households occupied by students

Using HESA data, we also looked at universities, and the number of students living in PRS accommodation. Imperial College London topped the list, with a quarter of its student population thought to be living in private rented accommodation.

Can enhanced PBSA provision help solve the supply crisis in the rental market?

An increase in PBSA provision would undoubtedly allow for greater flexibility in the private rented market. In some local authorities, greater provision would free-up thousands of rental homes for those in need. As a result, it could be assumed that easing the supply crisis would also ease the rate at which rents have been rising.

Soaring rental growth has meant that on average, renters across the UK are paying 32.3% of their income on rent. According to Homelet, this has risen from 30.1% a year ago. The Homelet index suggests that the level of rental affordability across the UK is at the lowest on record.

Analysis of JLL tenant referencing data across London, shows that JLL have seen a 13% rise in applicants for rental property over the past year. North London has seen the highest increase in applicant demand (+17%) as residents flock to more affordable locations. In the year to September 2023, 31% of our tenants were students, a rise from 27% a year prior.

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About JLL | October 2023

JLL is a leading global professional services firm specialising in real estate and investment management, with $16.6bn annual revenue in 2020, operations in over 80 countries and a global workforce of over 90,000. With over 7,000 employees and 15 offices in the UK, we support our investor, developer and occupier clients at every stage of the property lifecycle across both commercial and residential asset classes. This includes land purchase, access to capital, planning, development advisory, leasing, building management and sales.

JLL’s Residential and Living team consists of over 300 professionals who provide a comprehensive end-to-end service across all residential property types, including social housing, private residential, build to rent, co-living, later living, healthcare and student housing.

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