The man who sees every rent in Britain

The Property Podcast

In this episode of The Property Podcast, hosts Rob and Rob D are joined by Richard Donnell, Executive Director of Research at Zoopla, to analyze

Key takeaways

Richard Donnell highlights that rents are currently falling in cities like Nottingham and Birmingham but rising significantly in parts of Scotland.
The UK experienced record net migration which drove competition, but a recent decline in overseas students and workers is cooling demand in certain markets.
In more affordable regions where monthly rents are below Â£750, rental growth is seeing a 'catch-up' effect of approximately 5% to 6%.
London faces a unique affordability cap because the average deposit for a first-time buyer is roughly Â£150,000 against an average household income of Â£100,000.
Data shows that rental values for flats and houses have tracked each other closely, with only about a Â£50 difference on average over the last five years.

Main topics

UK Rental Market Trends
Regional Rent Variations
Impact of Migration on Housing Demand

Notable quotes

Landlords are rent takers. They're not rent setters.

Conclusion

The episode provides a data-driven look at why landlords must focus on

Transcript preview

Speaker 1 (0:02) Hey everyone, it's Robby here with Rob D. You are listening to The Property Podcast and this week we are in a very, very privileged position. We have access to a huge set of data that's never been discussed on this podcast before and to take us through that data, we have a very special guest. Speaker 3 (0:27) Yes, welcome to the Property Podcast. Thank you for joining us. In case you don't know, we run a business that arranges more than £100 million worth of property deals every year. And something that comes up all the time with our clients, of course, is rent. What are rents doing? How much rent should you be charging? And today, Rob, we're able to go deeper into that subject than we ever have before. Speaker 1 (0:47) We are. I'm really excited. Our special guest this week is Richard Donnell, who's the Executive Director of Research at Supla. And he has... wonderful, wonderful data at his fingertips. And the brilliant thing is he's sharing that with us today, Rob. We're getting access to the type of information that people just don't discuss elsewhere. And importantly, we'll discuss what that data means for our listeners and how they should be acting with it. And that puts us in an incredibly privileged position. I think it's worth saying that we showed Zoopla a bit of love in this episode, but there's not a paid partnership. This is just a coming together of two wonderful brands, obviously Zoopla being a mega, mega brand. But Rob, this is a mega episode. Speaker 3 (1:27) Yes, we are so lucky that Richard gave us some of his time and it was not an opportunity we were going to waste. So I cornered him in a room and got him to share everything, including where rents are rising fastest and why. why London has been lagging and what is going to change that. And of course, the big question that everyone wants to know the answer to, where are rents going from here? So I started out by asking Richard about that data. Where does it all come from and how did he manage to extract all the insights that go into his reports? Speaker 2 (1:53) Well, look, we're very lucky. We have a huge property portal. We have 9 million individual people using our website every single month. So we can see what renters are looking at. We can see how much competition there is for properties for rent. how landlords and agents are setting rents on a daily basis almost. And look, all of this is from advertised listings. But again, those signals of how people are interacting, whether landlords and agents are cutting rents because they've set them too high. It provides a really rich pattern on things like how much rents are changing, the time to rent a property, etc. And obviously, more importantly, you can look at it at a town, city or regional national level. Speaker 1 (2:30) It's so crazy to think you've got access to so much data and so much... information. It's knowing where to start. When you've analysed the data, what surprised you the most? What have you looked at and gone, aha, okay, did not expect that? What's Speaker 2 (2:45) it Speaker 1 (2:45) about for you? Speaker 2 (2:45) What took everyone by surprise was just how crazy the competition was for rented homes. We had record net migration into the UK. Landlords had not been investing for five or six or seven years, so supply was static. We had this position where 16, 17 people were chasing every single property for rent, and now that's totally reversed. But all of this plays through into how rents are changing. Today, rents are falling in some cities like Nottingham and Birmingham, but they're still rising at quite a decent rate, more than 5 % across more affordable areas, typically where rents are below £750 a month. And renters are seeking better value for money now. And so... you actually have quite a wide variation in kind of what's happening to rents. But again, that interaction of supply and demand has a massive impact on not just where rents are going today, but kind of where they're going to go over the next three or four years. I Speaker 1 (3:37) think that's really interesting because so much of the headlines that we read, it's the national data, but the regions, there's a story in every region. Like one region can be performing really well, but like you said, there's others that could be. falling behind but that's the stuff that really doesn't get talked about that often look Speaker 2 (3:53) it's a lot of the media today is um it's the headline what's the big picture but i think again if you're a landlord in birmingham or nottingham you know if someone puts out a story saying rents are up five percent you're going to be what's not me whereas if you're in oldham over the last five years or so you know your rents in the local market have gone up 60 basically and if you're in parts of scotland at the moment rents are still rising in double digits so but that's the whole housing market there are literally thousands of housing markets Same in the sales market. It's what's happening in typically local economies drive low housing markets, local rental markets. If the economy is doing well, incomes are rising, the jobs market is strong and or it's really unaffordable to buy a property that stokes up the demand for rented housing. And then, you know, subject to affordability because renters are limited on how much they can pay on rent around affordability. So, yeah, big variations around the country. Speaker 3 (4:46) So if you... boil it down to and you've touched on some of this already but what are the areas that are growing the fastest and what is it that those areas have in common? I Speaker 2 (4:55) think it's all about affordability at the moment I mean rents nationally have jumped 35 percent in five years that's exactly in line with earnings growth which is what rents track over the long run. But what we're seeing is a lot of what you call catch-up rental growth in cheap markets or cheaper, more affordable markets around big cities, particularly in Scotland at the moment, in areas around Falkirk and Kilmarnock, between Edinburgh and Glasgow, areas around Manchester. There is room for people to go and find better value for money in rents. And so in markets where rents are averaging less than £750 a month, which is half the national average, more or less, you know, rents are rising at 5 % or 6 % a year. But if you go to a big city that's seen a lot of rental inflation and renters simply can't afford to pay any more and there's much weaker demand because migration has fallen off, got fewer people coming to work and study, fewer overseas students, you know, rents are flatlining in those markets. And so I think it comes back to something I talk about a lot, which is landlords for me are rent takers. They're not rent setters. I'm sure they'd like to get X for their property. But at the end of the day, you can only get what the market will stand, basically. And in the rental market, it's very liquid. Homes don't stay on the market for long. The typical home rents within 12 to 14 days on Zoopla. But if you've still got no interest in the property, you've got to avoid looming. You have to make an adjustment in your rent. So again, I think that's an important point. Speaker 1 (6:24) It's so true. You often hear the narrative, oh, landlords are setting rents too high in a certain area, but it's the market. It's always the market. If a landlord could get away with charging £10,000 a month for a one bed and hold'em, then I'm sure they would, but the market won't allow it. And the market