UK rental market: rents on the rise as demand remains high

 

Strong demand paired with the shortage of rental properties has caused rental values to increase in most of the UK. What does this mean for the rental market?

Data from London estate agency Hamptons reveals rental growth has increased as stock levels have decreased across Great Britain. Rental growth outside of the capital hit the highest figure on record since Hamptons Lettings Index began in 2012. The average rent of a newly let property outside of London is 8% higher than in February last year. This equates to £68 higher per month.

This strong rental growth has been fuelled by a lack of stock. Since the beginning of the COVID-19 pandemic, 300,000 fewer rental properties have come onto the market. This is almost a third less than during the 12 months prior.

Landlords securing higher rent

The low supply of rental homes has led to half of landlords being able to secure higher rent than they previously achieved. With rental accommodation in high demand, void periods are also falling.

Aneisha Beveridge, head of research at Hamptons, says: “This year we’ve seen a sharp decline in the number of rental homes coming onto the market. Would-be tenants are now faced with significantly less choice, which in turn is pushing up rents. And with many landlords having multiple offers on the table, half of investors have been able to increase the rent they charge.”

Over the past few months, there has been a rise in landlords purchasing property. There has also been an increase in first-time landlords entering the buy-to-let sector. Many have been enticed by the stamp duty holiday and low interest rates.

This will likely continue with the extension and tapering end to the stamp duty holiday. Because of this, more rental properties will likely come forward to the rental market once more of those sales complete. This could help keep up with the growing demand for rental accommodation.

Rental growth on a regional level

According to the research by Hamptons, the south-east and south-west of England have seen the strongest rental growth with 10.6% and 9.2% year-on-year increases to rental values. The north follows with rents having increased by 6.8%.

As both landlords and tenants can usually get more for their money in the north, the region is expected to be appealing for both parties. This is especially the case as many people are searching for more space after successive lockdowns and with the rise of working from home.

London’s rental market

In the past year, London’s rental market hasn’t fared as well as the rest of the UK. Inner London saw rental values drop by a whopping 17.7%, according to Hamptons. Greater London also saw rents decrease but only by 0.2%. However, Outer London has seen growth with rents increasing there by an average of 5.3%.

Additional research by estate and lettings agency Portico reveals landlords are seeing particularly strong yields in areas of East London. Barking has the best rental yield in the capital with 5.9%. This neighbourhood even has one of the lowest median house prices across Greater London. Upney and Wall End, both of which are also in East London, followed closely behind with 5.8% rental yields.

This further shows how key location is with the success of buy-to-let investment. And it is particularly important as new rental trends have been revealed. Many tenants have changed their property priorities, including location preferences, in the wake of COVID-19.

Robert Nichols, CEO of Portico, comments: “Our research shows that there are still healthy rental yields to be found in London – if you know where to look. Outer London areas are actually seeing rent increases between 1-3% as tenants – now spending a lot more time at home – migrate from more central areas to the suburbs looking for more space.”

Highgrove Mews

High Net Yield Freehold Houses

  • Commutable to London (27 mins to central Paddington station)
  • Rental demand extremely strong with large industry presence in Reading
  • Freehold with 4% net yield

£284,955 - £457,000

St Petersgate – Stockport Manchester

New Launch - Stockport Manchester, apartments from £160,000

  • Discounted launch prices from £160,000
  • Excellent transport links with 3 trains per hour to London Euston and only 9 mins journey to Manchester Piccadilly
  • Experienced development team

Assured Rent Housing Association Leases

Assured Rent Housing Association Leases

  • Assured rent & no rental voids
  • Tenant damage cover & newly refurbished inline with requirements of a corporate sitting tenant
  • Free property and lettings management

From £62,000

Emerging Birmingham Commuter Town With Properties From Just £104,000

The emerging Birmingham commuter town where properties are selling in an average of just 24 days

  • A collection of 62 two bedroom apartments and 28 one bedroom apartments.
  • DE14 is one of the fastest selling postcodes in the West Midlands.
  • 23 minute train journey into Birmingham New Street Station.

Properties from £104,000

Mill, Stockport

The Northwest's emerging property hotspot

  • Discounted off-plan 2-bed prices from £162,000
  • Completion date - Q4 2021
  • Rental yields - 6% plus

Discounted off-plan 2-bed prices from £162,000

South Central – Birmingham City Centre Apartments

Highly anticipated 28 storey launch in Birmingham City Centre with an impressive roof garden and communal facilities.

  • 154 units across 28 storeys
  • Residential multi-media community room, gym, roof garden and sky cinema
  • Excellent future connectivity via the metro system to other key transport hubs and locations around the city

from £205,800

ba-

Talk to us

Speak to our UK property experts today: 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

+852 9865 4446

Open from 9am-6pm HKT

Stamp Duty Calculator

.

Unlock members only investment opportunities and full development details. Join now – it’s free, quick and easy.

Login

Not a member? Sign up for free

rental demand

UK rental market: rents on the rise as demand remains high

Example

By submitting your details via this online form you agree to be contacted via email/phone/SMS by Direct Marketplace Ltd t/a BuyAssociation in relation to property investment and property developments . We do not share your personal details with third parties.  To view our full Privacy Policy click here.