A booming rental market for landlords – 60% increases for the most high-demand areas of the UK!
- TBA
- Apr 24, 2024
- 4 min read
Recently, one of the largest property websites in the UK, Rightmove, analysed 360 administrative regions of the UK and summarised a very detailed list of the hottest rental locations in the UK in 2023.
The data shows that the rental market in the UK was quite lively in 2023, with the average number of inquiries per property increasing from 6 times in 2019 to 20 times in 2023. Due to a significant increase in demand, the average monthly rent in five administrative regions of the UK has risen by 31% to 60% since 2019.
Rightmove also showed that Wrexham in Wales is the most popular rental area! It is said that landlords in Wrexham receive an average of 56 rental inquiries per day, eight times more than other areas.
Let’s go! Let’s take a look at the rankings together! See if your property is listed there.
Top rental markets in 2023
Here are the average rents (pcm), plus the percentage difference since 2019, ranked by order of popularity (rental enquiries):
Wrexham: £960 pcm (+35%)
Redbridge: £2051 pcm (+31%)
Tameside: £1060 pcm (+60%)
Stockport: £1389 pcm (+47%)
Glasgow: £1038 pcm (+44%)
Other popular markets include Thurrock (£1550), Salford (£1205), Blackpool (£795), Gravesham (£1570) and Waltham Forest (£2097).
Rental market trends in 2024
Recently, economists have predicted that with the inflation rate approaching the official target of 2% and stagnant economic growth, the Bank of England is preparing to cut interest rates at least twice in 2024.
So, what impact will this have on the rental market in 2024? Is it still worth investing?
Data from Rightmove suggests that there are signs indicating an improvement in the supply-demand balance next year. Currently, the number of rental properties available is 11% higher than the same period last year, while the number of tenants looking for housing and making inquiries to property agents is 12% lower than in 2022.
Although the supply-demand gap is improving, tenant demand is still 42% higher than at this time in 2019, while the number of rental properties available has decreased by 28%. This indicates that it will still take some time to achieve a supply-demand balance and reach the relatively normal market levels of 2019.
In other words, considering the current situation of bank interest rates and the rental market, investors who wish to enter the rental market this year still have a high likelihood of achieving substantial returns.
TB Accountant’s tax-saving strategies for landlords
Seeing these relatively positive pieces of information, are you eager to take a chance in 2024 and become a landlord?
You will also need to understand how to save on taxes – after all, taxes can be a significant expense. We’ll share some tax-saving tips which could help you maximise your profits for the 2024/25 tax year.
Establishing a limited company
As a landlord, setting up a limited company is a good way to reduce taxes. You can purchase properties through the company – this allows you to offset costs with profits, and you can also hire yourself or others to manage properties in your investment portfolio.
Although this particular tax-saving strategy may not suit everyone, if it works for you, the tax-saving effect can be quite significant. If you’re interested, please contact your accountant to see if this tax-saving strategy is suitable for you.
Utilise all available tax bands
As a landlord, another way to potentially reduce tax expenses is to transfer some assets to your spouse. Transferring assets between spouses generally does not incur capital gains tax, so you can effectively utilise your spouse’s lower tax rate.
If your spouse’s tax rate is lower than yours, you may also end up paying less rental income tax. If the relevant property does not have a mortgage and you do not receive any financial gain from the transfer, you do not need to pay any stamp duty.
Make the most of your expenses
Many landlords can reduce their tax expenses simply by paying more attention to their expenditures, so our advice is to make sure to declare all expenses. From now on, keep every receipt and consult your tax advisor or accountant to clarify which expenses are deductible and which are not.
For example, expenses for maintaining a home office and letting agent fees can both be deducted from your profits, so why not apply for them?
Consider short-term letting
If you’re currently experiencing a vacancy period with tenants, you can reduce landlord taxes by offering short-term rentals. During this period, expenses such as council tax and utility bills can be declared as expenses.
Selling smart
Landlords often incur losses when selling rental properties because they fail to fully utilise existing tax relief policies. Landlords with multiple properties are especially susceptible to this, as if they decide to sell one of their properties, they can actually enjoy a 0% capital gains tax exemption each year. Currently, the exemption threshold is £11,300, which is a great way to save.
Of course, as a landlord, the best way to save on taxes is to hire an excellent accountant and a reliable tax professional who can assist you at every step.
