Levels of rental demand continue to boom across the country, and the UK’s major cities are once again the most sought after destination for today’s tenants.
The likes of London, Birmingham, Edinburgh, Manchester and Leeds have been highlighted as some of the key UK cities where rental growth has rebounded to impressive levels. In a new report published by Zoopla, appetite for central city locations in particular has actually doubled, with outer city areas lagging slightly behind.
Across the country, rental demand has seen its strongest growth in 13 years, says Zoopla. This even includes London, which witnessed its first rental growth in 16 months. As of the end of September, the cost of renting has risen by 4.6% year-on-year on average across the UK. When you take London out of the picture, this rises to 6% – a 14-year high.
Strongest areas for rental demand
On a city level, quarter-on-quarter rental growth in inner London reached an impressive 5% in Q3. The inner city of Birmingham followed close behind, with a surge of 4.6% since Q2. Edinburgh is next with top growth of 4.2%, followed by Manchester at 3.9% and Leeds at 3.6%. All of these cities are already hugely popular with renters and property investors alike, and the latest data demonstrates how demand is still increasing in these areas.
The areas with the highest rental demand are also the most affordable. The report shows that tenants are paying out around 37% of income, which is in-line with the five-year average.
The highest rental price increase was in the south-west, where rents climbed by 3.3% between June and September. On an annual basis, rents in the area have risen by 9%. Wales, the East and West Midlands, the north-east and the north-west have also experienced particularly strong growth.
Tenants snapping up properties
The average time it takes for an available property to be rented out was just 15 days as of September this year, according to Zoopla. The report also notes that there as been a shift in spending patterns, with demand increasing in the higher rental price brackets.
The report adds: “This will be a reflection of the rises in average rents seen over the last year in the UK excluding London, but also signals an increased demand for larger properties, with more space, echoing a key driver in the sales market at present.”
The future of renting
In terms of outlook, Zoopla expects these high levels of rental demand to largely continue. With supply levels remaining low, as well as more people than ever renting rather than owning homes, it could be a busy time ahead for landlords.
Zoopla’s analysis concludes: “There is more leeway for stronger rental growth in areas of the country where rents are relatively more affordable, suggesting that rents could rise above earnings outside the south of England, supporting rental growth across the UK excluding London at 6% in 2021 and 4.5% in 2022.”