UK rents outside London are up 3% since this time last year, signalling the highest level of growth in four and half years.
Rents are rising fastest in the North East (+5.5%) and the South West (+5.3%) – the strongest rates of growth in a decade amid increased demand and constrained supply – according to Zoopla’s quarterly Rental Market Report.
It reveals that rental performance outside London was driven by a 59% rise in demand during April compared to the same month in 2017-19.
It says Covid’s impact was felt most acutely in city centre rental markets where stock moved over from short-term lets and more rental stock came back to the market amid easing demand.
Rents are still down by 0.7% in Leeds, -1.1% in central Manchester, -3.2% in central Edinburgh and -9.9% in inner London.
But the city centre downturn is starting to reverse as the economy opens up; renter demand was up 26% in central Edinburgh, 12% in central Leeds, 7% in inner London and 5% in central Manchester in the month after Easter.
Zoopla says demand in the capital is being fuelled partly by a sharp improvement to affordability, with rents down -9.4%.
Agents are reporting an increased number of longer-than-average tenancies – in excess of 12 months – being agreed.
Chestertons says demand is so strong that some properties are being let off-market, while those that have been listed, secured new tenants within two weeks and often after just one viewing.
Rental property supply in most markets is failing to keep up with demand.
The number of properties bought using a buy-to-let mortgage was 45% lower in 2020 than in 2015, and the number of homes in the sector has fallen slightly since 2016 as landlords rationalise their portfolios in the face of tax changes and additional regulation.
Zoopla’s head of research, Gráinne Gilmore (left), says: “Demand will continue to rise in city centres as offices start to re-open and this, coupled with increased affordability levels in many cases, will start to counter the negative pressure on rents seen over the last 12 months.”