Demand for rental properties continues to outstrip supply, leading to soaring rents and aggressive bidding wars across UK rental markets in all major cities.
Rents are rising at the fastest rate in 16 years, making the UK rental market a lucrative investment.
Average asking rents outside of London hit an all-time high of £1,126 per calendar month in July, representing an annual increase of over 11% (Rightmove). Rents inside of London reached a staggering £2,257 per month in the second quarter of the year.
Data from TwentyCi recently revealed that UK rental listings are around 30% lower than in September 2019, whilst prices are over 20% higher.
Over the past couple of years the UK rental market has been chaotic, to say the least, with a substantial number of people flocking back to the cities following the pandemic. Many existing renters are choosing to renew their tenancies rather than re-enter the market and struggle to obtain a new property. As a result, quality rental properties are extremely hard to come by.
Where are UK rental markets heading?
September saw the announcement of the mini budget; a subsequent decline in the value of the pound, and the seventh interest rate hike by the Bank of England.
This disruption in the market has led to a drop in affordability, with many prospective and existing homeowners either unable to get onto the property ladder or hang onto their homes.
Less homeowners will naturally lead to an even larger rental population. Moreover, population growth is also outpacing supply, which will continue to put pressure on the UK rental market.
Which cities have the hottest markets?
Renters are scrambling for a property in the UK’s capital, with a 35% decrease in rental listings in September, and demand higher than it has ever been. Last month, the number of new prospective tenants registering with Knight Frank across London was 68% above the five-year average. Inquiries per rental ad on SpareRoom were up 273% since Sep 2019, with each ad receiving an astonishing 86.5 inquiries. Furthermore, British estate agency, Foxtons, had 38% less listings in September than the previous year—with 29 applicants registering for every new property brought to the market.
And London isn’t the only UK region in the midst of a rental crisis. The number of listings in Manchester has fallen 40% over the past three years, inquiries are 3.7 times higher, and prices have risen by 32%.
Bradford saw the largest percentage change in rental listings (alongside Kingston upon Hull) with a 52% drop in listed properties. Moreover, inquiries on SpareRoom increased six-fold (the largest increase in the UK) with each rental ad receiving 509% more inquiries than in September 2019.
Such a dramatic supply and demand imbalance across the country is sending average asking rents through the roof, and naturally capturing the attention of investors around the world. Landlords can expect excellent rental yields—in spite of rising mortgage costs—and no shortage of tenants. This makes rental properties in the UK’s major cities an attractive investment.
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