Rents in Leeds, Birmingham and Manchester are rising at above the national average while young people are leaving London in swathes due to rising housing and living costs, a new survey has revealed.

Landbay’s National Rent Review shows that rents in the UK rose by 0.97% over the previous year, but the good news for landlords is that Leeds, Birmingham and Manchester saw rises of 2.54%, 2.05% and 1.91% respectively.

And although below the national average, a rental rise of 0.58% in the capital was up on Landbay’s 2017 figures. Rents in London are rising in 27 of London’s 33 boroughs – an improvement on last year when they dropped in 26. The average monthly rent in the UK is £1,212 but when London is taken out of the equation, that figure drops to £769, a rise of £8 in 2018.

‘Capital’s millennial exodus’

The report also flags up how large numbers of young people are leaving the capital, with the 25 – 34 age leaving in the greatest numbers for a decade. Internal migration has seen London’s net population decline by nearly half a million since 2012, with a knock-on effect of slow rental growth. By contrast, rents in Leeds, Birmingham and Manchester have tripled in the same period.

“The truth is there is now a twin speed rental market as London’s rent growth is dwarfed by cities such as Leeds and Manchester,” says Landbay CEO John Goodall.

“This is being fuelled by the capital’s millennial exodus as countless young professionals realise there is more to life than London. This same message carries weight with landlords, who are increasingly seeing the value of investing in these regional hubs.

“In many ways it could be argued that the ‘Northern Powerhouse’ is beginning to take effect amid stretched affordability and a harsher tax regime.”

The report backs up previous research on how the regions are faring compared to London when it comes to buying property, and how London residents are eyeing bargains away from the city. Recent figures from Hamptons International showed that 61% more London home owners were buying out of the capital compared to a decade earlier.

Great expectations in the regions

Leeds is to be the new HQ for Channel 4, and the city may be hoping for a similar boost to its economy and profile to when the BBC moved a big chunk of its operations to Salford. Rents in Salford have risen by 2.62% in 2018, and with TalkTalk also pitching up, the benefits for housing there and in Greater Manchester seem set to increase further.

Birmingham’s population is expected to grow by around 150,000 by 2031, but in the mean time there are several exciting developments in England’s ‘second city’. HSBC and Deutsche Bank now have major presences, there will be plenty of building work around the 2022 Commonwealth Games and the construction of the HS2 line into the city will bring in thousands of jobs and people needing accommodation.

‘Green shoots – not all doom and gloom’

“It’s hard to escape the fact that we’ve seen a slowdown in the property market due to Brexit uncertainty and recent tax and regulatory changes for landlords,” adds Mr Goodall.

“In that context, these growth figures show just how resilient property continues to be as an asset class. It is prudent to have a diversified portfolio – backed up in the case of buy-to-let by London’s recent fall and revival alongside strong performances from cities including Leeds and Manchester.

“London’s green shoots paint a positive picture for landlords ahead of what will likely be testing economic times with Brexit and further interest rate rises expected.”