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Will hybrid working affect long-term renting trends? 

The pandemic and its extraordinary impact on where and how tenants live has caused the current stock shortages, DPS boss says.

Matt Trevett - MD of The Deposit Protection Service

trevett dps renting

The way tenants are renting across the UK has changed significantly during the past two years.

Many who worked from home to help stem the spread of the coronavirus also swapped a location near the office for a more spacious property where the daily commute was little more than a wander across the hallway.

During this period the housing market boomed, stimulated in part by a relaxation in stamp duty. Some landlords felt the time was right to dispose of their portfolios as demand for property and prices soared.

Others, who might have inherited property and therefore had the potential to be ‘accidental landlords’, also decided to sell up ahead of proposed future BTL regulation and standards requirements.

Supply challenges

I’m confident all the above has contributed to current renting challenges around the supply of good quality and affordable rental homes; our data also suggest renters are staying in properties for longer, further impacting the availability of rental stock.

In 2022 the Government and employers are now looking to drive collaboration and reinvigorate physical teams — not to mention throw a lifeline to the sandwich bars and coffee shops of towns and cities across the UK — by encouraging people back into the workplace.

Some employers have however decided that workers can work where they live, with only occasional trips to the office, while some have gone as far as to hire some people exclusively on working from home arrangements, meaning they may never set foot in their employer’s building.

Many employees have developed an effective home-based style of working. How they will react in this new ‘hybrid working age’ is still largely unknown.

For example, will they physically go back to the office, and at what rate, and how will organisations influence any such return?

The response of employees will however be crucial to the demand for rental property in differing locations across the UK.

Rural renting

During the pandemic, our regular Rent Index noted significant rises in rental values across the UK, with the most pronounced growth taking place across more rural locations.  As renters approach the end of their ‘pandemic leases’, they will no doubt further weigh up their options.

We are already seeing a recovery in some city centre rental values: monthly rents for flats in Central London rose by over 6% year-on-year in 2021 compared with nearly a 3% fall across the same period of 2020.

Other sources confirm healthy signs of a potential recovery in urban private and commercial property rents as companies reduce working from home and city dwellers return to their preferred lifestyles.

Perhaps employers’ varied approaches will also lead to greater rent parity across the UK. Workers could be more able to state where they base themselves and therefore have less need to move in order to secure a job.

Urban rents

As people start to return, urban rents will continue to strengthen with rural rents (that have risen, some particularly strongly in the past couple of years) holding firm.

It’s tricky to predict the extent to which rental stock shortages, high demand in certain locations and, perhaps, future increased costs of borrowing driven by rising interest rates will drive future rental costs.

The combination of changing working patterns, the return to the office and the normalisation of hybrid working will all affect long-term trends. It’s how exactly that happens that will be of the greatest interest.

Author bio: Matt Trevett is MD of The Deposit Protection Service (The DPS).

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