city centre busy

City centres are back in favour as high rental demand returns

City centre living will always be popular among tenants wanting to be in the thick of the action, and it seems rental activity has well and truly rebounded. 

The latest UK Rental Market Report from Zoopla demonstrates how demand for homes is growing across the private rented sector, with an increase of +8.3% in new lets in Q4 2021 compared to the same period in 2020.

And heightened demand has been noted in the country’s city centres, particularly over the past six months. The pandemic arguably created a dip in appetite as amenities in cities temporarily closed down, and some tenants chose to move further afield, but life is now beginning to return to normal for many.

Offices have reopened, students are returning and international demand is climbing once again, says Zoopla, which is all creating a buzz around UK cities.

Tenants seeking homes in the city centre

“Rental demand has risen strongly amid increased activity in city centres, but supply is still constrained, leading to the fastest growth in rents in Q4 than at any time over the last 13 years,” says Gráinne Gilmore head of research at Zoopla.

The data shows that around 8% of previously rented properties were put up for sale in the second half of last year, as some landlords cashed in on gains, and either left the market or reinvested elsewhere. Stamp duty changes and taxes against landlords have also created reductions, says the report.

On a city-by-city level, rental price growth in London has been the highest, indicating growing demand, with an 11% annual rise in inner London. This is followed by Manchester, where the rental market has been booming, with a 9.7% increase.

Birmingham closely follows with a 9.6% rise over the past year, matched by Leeds. All of these cities contain highly regarded universities, high levels of young professionals and flourishing jobs markets, as well as exciting regeneration projects creating homes, jobs and amenities.

Rising rents but affordability stable

Zoopla notes that, while constrained supply levels combined with growing demand have pushed up rental prices, affordability remains largely in line with the 10-year average. The percentage of salary to cover rent for single earners is currently at 37%.

“The headline affordability metrics suggest that rents could rise more before affordability becomes very stretched,” says the report.

“There is flexibility in the rental market among those with more disposable income, who can adjust their rental expectations in line with their budget, choosing a slightly smaller property to lock in a lower headline rent.”

“However any rises in rents will be felt most keenly by those on lower incomes who have less choice in the market.”

Tenants sharing rent with another person will find their rent accounts for 18% of an average income, according to Zoopla’s data.

Landlords confident in the market

It is hoped that supply issues will begin to resolve, and the January peak of demand will ease into the second quarter of this year. The city centre rental market may still be increasingly popular among tenants, but landlords are also recognising this demand.

Recent research from Shawbrook Bank revealed that more than a third (34%) of landlords plan to purchase at least one more property over the coming year. A further two thirds (67%) say they are confident in the UK property investment market over the next 12 months.

The report, which used a combination of research from ONS and Ministry of Housing data, as well as an Opinium study, also revealed that flats remain a popular option for landlords. This tallies with recent reports that house price rises have been the most marked in flats and city centres in recent months.

BuyAssociation has a range of property investment opportunities available, with a particular focus on some of the UK’s most important cities for the rental market. Get in touch today to find out more. 

Self-certified Sophisticated Investor

Please read

I declare that I am a self-certified sophisticated investor for the purposes of the restriction on promotion of non-mainstream pooled investments. I understand that this means:

I am a self-certified sophisticated investor because at least one of the following applies:

I accept that the investments to which the promotions will relate may expose me to a significant risk of losing all of the money or other property invested. I am aware that it is open to me seek advice from someone who specialises in advising on non-mainstream pooled investments.

High Net Worth Investor

Please read

I make this statement so that I can receive promotional communications which are exempt from the restriction on promotion of non-mainstream pooled investments. The exemption relates to certified high net worth investors and I declare that I qualify as such because at least one of the following applies to me:

STAY AHEAD OF THE MARKET

Sign up for first access to new developments and exclusive property investment opportunities.

We send limited and targeted emails on new launches and exclusive deals which best fit your areas. We are trusted by over 30,000 active buyers as their source for new stock.

  • New property developments
  • Professional market reports
  • Property deal alerts
  • Development updates
Manchester property investment

FIRST FOR NEWS AND KNOWLEDGE.

Receive trending news straight to your inbox and stay up to date on all of the property market trends and advice.

Established since 2005 we are a leading voice of authority and commentary on the UK property market. Our news is trusted by Apple News & Google News.

  • UK housing market
  • Mortgage & money
  • Buy-to-let landlords
  • Guides & advice

Talk to us

Speak to our UK property experts today:

 

+44 (0) 333 123 0320

Open from 9am-6pm GMT

 

+852 6699 9008

Open from 9am-6pm HKT