The rental revival comes as offices begin to reopen and rental affordability improves, particularly in London where it had hit a 10-year high.
According to research, a three-speed rental market is emerging across the country as renters start to return to city centres.
One year since the housing market reopened, the pandemic-led drop-off in demand for rental properties in city centres are starting to bounce back as the lockdown restrictions lift.
According to industry research, it has led to three distinct rental markets: major city centres, London, and the wider commuter zones and beyond.
Major City Centres
Demand for rental homes in central Edinburgh soared by 26% in the month of Easter, while it is 12% higher in central Leeds and 5% higher in central Manchester. The research also acknowledged that there is a seasonal element to this trend, but the rise in demand in these city centres has outpaced the growth in wider commuter zones over the same timescale.
In addition, rental affordability has improved in most cities, with rents in Manchester now accounting for 28% of a single earner’s income, down from 30% in March 2019. The exception to this trend is Birmingham, where it had slowed since Easter after a strong period throughout February and March across the city.
Similarly, London saw a comparable pattern where rental demand was up by 7% in the month since Easter. Rental decline in London bottomed out in February, with overall rents in the capital now down by 9.4% in the year to March.
Rent is now at its most affordable in 10 years. They account for 42% of a single earner’s income, which is down from 49% last March, and a peak of 53% in the last months of 2016.
Average rents in the City of London, Kensington and Chelsea, and Westminster have fallen to their lowest levels in a decade, with Westminster rents running at £2,259 per month – down from £2,617 per month in February 2020.
According to reports, rents are rising fastest in the North East of England, with the Midlands shortly after. On average, rents in those regions accounted for a fifth (20.8%) of average income for a single earner in the region before the pandemic, compared to the average 32%. For Derby specifically, the growth in rents over the last year has pushed the affordability to 23.3% yet remains one of the more affordable regions when renting a property.
What is the Background?
The impact of the pandemic has had a huge impact on city centre rental markets, as consumers searched for less urban areas for properties with more space, both inside and out. Major cities such as Edinburgh, Leeds, Manchester, and London were at the forefront of the rental slowdown, as offices were closed, and tourism was on hold. However, the city centre downturn is starting to reverse as the economy begins to open up again, workers return to offices, leisure activities restart, and renters return in search for a rental bargain.
What Does This Mean for You?
With rental demand increasing in demand, particularly in city centres as lockdown eases and offices reopen, if you have a rental property, this is a great opportunity to let it.
Affordability has improved in many cities, and many renters in the capital are looking to lock in the current affordability for as long as possible. Estate agents have reported that they have seen an increase in tenancies for longer than 12 months being agreed in London.
What is the Outlook?
According to research, it is highly likely that demand will continue to rise in city centres as offices reopen and coupled with increased affordability levels, the negative pressures on rent from the last 12 months will start to lift.
Are you looking to rent in Derby? Derby is the UK’s most central city benefiting from the best of both worlds – a great cultural base situated on the edge of the Peak District National Park, as well as a thriving city centre with an excellent range of entertainment, attractions, and open spaces.
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