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Growth of tenant demand appears to be exceeding supply

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UK private rents increased by 1.3% in the 12 months to August, rising to 2.0% excluding London.

The fastest rates of growth were in the East Midlands (2.7%) and the South West (2.6%), while London was the only region to record a decrease (-0.4%).

The RICS UK Residential Market Survey (PDF, 4.8MB) suggests that an imbalance between tenant demand and the supply of lettings could be contributing to the increase in rental prices.

In the three months to August 2021, RICS reported that tenant demand was accelerating while landlord instructions remained in decline.

The fall in supply of lettings was most widespread in the Midlands, the East of England and the South West.

It could be that some landlords are trying to capitalise on domestic tourism through holiday lets, leaving fewer long-term lets for prospective tenants.

This is a particular issue for those looking to rent in tourist hotspots, where rates of second home ownership are much higher than average. Research suggests that many second homes have become holiday lets during the pandemic.

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