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The rental market is experiencing continued demand, with indications pointing to this trend continuing in the long term. With lower numbers of rental properties than potential renters on the market, the rental market is set to become even more competitive causing difficulties for young renters looking for suitable accommodation.
What do landlords have to gain from the current rental supply imbalance?
Reduced Vacancy Periods
With a higher demand for rental properties, landlords can enjoy shorter vacancy periods. Properties are more likely to be rented out sooner, minimising the time properties remain unoccupied. This ensures a steady stream of rental income and mitigates the financial strain associated with prolonged vacancies.
Selective Tenant Screening
The growing demand for rental properties allows landlords to be more discerning in their tenant selection process. Landlords can carefully screen potential tenants, choosing those with excellent rental histories, stable incomes, and responsible behaviour. By selecting reliable tenants, landlords can minimise the risks associated with property damage and unpaid rent, ensuring a smoother and more profitable rental experience.
Increased Rental Prices
The competitive rental market resulting from rising demand empowers landlords to charge higher rental prices. As demand surpasses supply, landlords gain leverage to adjust rental rates to match market conditions. Higher rental prices enable landlords to maximise their return on investment and boost their profit margins, leading to increased financial stability and growth.
Expanded Profit Margins
The combination of shorter vacancy periods and higher rental prices contributes to expanded profit margins for landlords. By reducing the time a property remains unoccupied and optimising rental rates, landlords can achieve a more favourable return on their investment. These improved profit margins create opportunities for further property investment, property maintenance, and enhancement of rental offerings.
The increasing rental demand in the market has a positive impact on landlords in various ways. Landlords benefit from shorter vacancy periods, enabling them to generate consistent rental income. They can also be more selective with tenants, reducing the likelihood of property damage and rent arrears. Additionally, the competitive market allows landlords to charge higher rental prices, leading to improved profit margins. With careful management and adaptation to market trends, landlords can thrive in the evolving rental landscape. Additionally, as more landlords enter the market the supply and demand crisis will inevitably level out, causing positive knock-on effects for tenants.