Demand for rental properties in cities is spiking as city centre living is more attractive with lockdown restrictions easing. What does this mean for the rental market?
City centre rental enquiries are surging as lockdown restrictions are starting to ease. During the successive lockdowns of the past year, there was a rise in buyers and tenants looking for larger properties in countryside locations.
However, demand for city centre living is back on the rise as there is now a growing trend of renters wanting to move back to urban areas. This will likely increase further as lockdown restrictions continue to ease, as more businesses and professionals return to the office and as more socialising is allowed.
With the promise of restaurants, shops, pubs and entertainment and leisure facilities re-opening in the future, this is attracting many renters back to city centres. A large portion of young professionals still want the buzz of city centre living. And the vaccination program is providing light at the end of the tunnel.
Analysis by Rightmove looked at the increase in enquiries for rental properties since February 2020. This showed enquiries for city centre rentals increased by as much as a whopping 126% year-on-year.
Where are the largest increases in demand?
There are a number of cities in the UK seeing particularly substantial increases in demand. There has been an especially strong rise in enquiries from prospective renters in city centres in the north of England and Midlands.
In Sheffield, rental enquiries has increased by 102%. Manchester follows with enquiries up 69%. Leicester has seen a 68% uptick, followed by 60% in Derby, 58% in Nottingham and 55% in Leeds and Coventry.
Additionally, there has been an increase in enquires for rental properties in Zones 1 and 2 in London. In the past year, demand had been stronger for quieter parts of Greater London. However, enquiries are now increasing for Inner London neighbourhoods.
Tim Bannister, director of property data at Rightmove, comments: “Last year, we identified a clear trend of renters moving out to quieter parts of Greater London as the allure of life in the city centre became less appealing during lockdown.
“With the prospect of some kind of normality potentially on the horizon, it appears that the capital’s renters are now looking to return to Inner London and are making the move now to take advantage of the lower rents.”
What does this mean for the rental market?
Lockdowns restrictions are easing between now and 21st June. This will likely cause demand for city centre properties to increase even more in the coming months. City centre living has numerous benefits, especially for students and young professionals, with facilities and transport right on the doorstep.
Data from London estate agency Hamptons revealed rental growth has increased as stock decreased across Great Britain. This caused the average rent of a newly let property to rise by 5.6% compared to February 2020. This is the fastest growth since February 2015.
While some major cities saw rental prices fall as demand fell during the lockdowns, others saw price increases. The recent uptick in rental demand in city centres could cause rental prices to rise in the coming months as more tenants compete for properties in prime locations. This could also lead to shorter void periods for many landlords and investors.
With the tapering end to the stamp duty holiday, investors and landlords could take advantage of the tax savings to expand their property investment portfolios. And city centre locations in the north and Midlands provide lower entry prices and often higher yields due to the growing demand.
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