In 2016, London was the only region within the UK to not record a rise in asking rents. With the national average rising 3%, Yorkshire and Humber (4.5%) and the North West (4.4%) overtook East of England as the best performing individual regions.
The top UK locations for rental properties on Rightmove, driven by tenants, is dominated by the north. Three Greater Manchester and Cheshire areas, namely Ashton-Under-Lyne, Oldham and Stockport, sit in the top five most highly demanded destinations outside of Greater London, accompanied by Edinburgh and Wellingborough, Northamptonshire.
In Greater London, Rightmove noticed a trend in tenants looking to Outer London, in search for better value, with areas such as Rainham, Bexleyheath and Erith proving most popular. Outer London recorded a comparatively small 2.5% drop in rental values, considering the 5.2% drop suffered by Inner London landlords.
Rightmove’s Head of Lettings, Sam Mitchell, said “if the tax changes being phased in from this April lead to even fewer buy-to-let purchases and some landlords deciding to sell, then a tightening of supply in some areas will lead to increasing rents. We forecast that asking rents could rise by 4% outside London by the end of 2017, although in London prices are likely to stay flat.”
The report states that buy-to-let investors looking to grow their portfolio should consider areas such as Merseyside and Lancashire for the best yields, and would be likely to achieve over 7% by acquiring properties that are suitable for families and young professionals who are looking for longer term contracts.
“Investors looking for the strongest yields could consider investing in certain areas in the North West where both demand and yields are high. Those with a number of properties in the capital may find that tenants are more price sensitive, so setting realistic rent levels will be the key to avoiding void periods.”