Rents continue to climb across the UK, with the North seeing a surge in demand that’s leaving London in the dust.
While the average rent across the whole country rose by a respectable 5.7% in July, hitting £1,354, the North is truly booming. The North East, North West, and Yorkshire and Humber regions saw an incredible 10.3% annual increase in rents, more than triple the growth seen in London.
London’s Slow Down
London, on the other hand, is seeing a more subdued growth rate at just 3%. This is significant, as the capital has traditionally been the hottest market for rental property. Even more surprisingly, inner London rents have now overtaken outer London rents, something that hasn’t happened since January. This shift suggests that tenants are looking for more affordable options within the city.
Expert Insight
Aneisha Beveridge, Head of Research at Hamptons, explains that “Rental growth continues to outpace inflation, despite the pace of growth slowing down.” While this is good news for landlords, Beveridge also warns that “the large increases in stock levels since 2023 are beginning to subside.” This means that the number of available rental properties is declining, which could lead to even faster rent growth in the future.
The Small Home Advantage
The rental market is also seeing a change in the types of properties that are most in demand. Tenants are increasingly looking for smaller homes to keep their monthly costs down. As a result, the average rent for a one-bedroom property has jumped by 7.6% to £1,092, matching the average rent for a two-bedroom property from September 2022. Meanwhile, rents for larger homes have seen more modest increases.
What Does This Mean for Investors?
The continued rise in rents across the UK, particularly in the North, offers a strong opportunity for landlords and investors. This booming market presents a chance to secure properties in areas with high demand and strong rental yields. However, the shrinking stock of available rental properties and the increasing popularity of smaller homes are factors to consider when making investment decisions.
It’s a Landlord’s Market
The bottom line is that the rental market remains favourable for landlords and investors. The North is seeing a surge in demand that’s outpacing even London, and the overall market is showing signs of a tightening supply, which could lead to further rent increases in the future. This is a great time to consider adding rental properties to your portfolio, but make sure to do your research and understand the current trends before making any big decisions.