Tenants are returning to city centres after temporarily moving out, new research suggests.
The combination of this higher demand, along with lower stock, has led to an increase in rental prices in many city centres, according to Rightmove.
While suburban and rural areas remain more in demand among tenants, this is likely to change as more boomerang back to busier locations, the property website claims.
Tenants are returning to city centres after temporarily moving out, new research suggests
It said that rents in some city centres have not only bounced back from the declines recorded during the year since the pandemic started, but they have now hit double digit growth and are outpacing the national average.
Across Britain, rents are rising at the fastest rate ever recorded by Rightmove, up 8.6 per cent annually outside London.
The capital is also beginning to show signs of growth, with rents up by 2.7 per cent on a year ago.
In Birmingham, rents fell by 5 per cent between February 2020 and February 2021.
But by September this year, the increased demand helped them to grow to 10 per cent higher than pre-pandemic levels.
It is a similar picture in Nottingham where rents fell 2 per cent, and have now grown to 11 per cent higher than before the pandemic.
Edinburgh has seen rents grow by £100 since February of this year, but they still trail by 5 per cent when compared with February 2020.
|City centre||Average asking rent Feb-20 (pre pandemic)||Change |
|Average asking rent Sep-21||Change Sep-21 vs Feb 2020||Increase in tenant demand versus Sep-20|
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More than half of tenants in the UK are in no rush to get on the property ladder because renting is cheaper, less stressful and they do not have to do any decorating. Meanwhile a third – 30 per cent – told researchers they do not know where they would like to settle down. And a staggering 47 per cent think they will never own a property in their lifetime.
Outside of London
Total rental demand is now up by 39 per cent compared with the same time in 2019, and up by 11 per cent compared with a strong September last year.
This demand has led to properties being snapped up at the quickest rate ever recorded, at 17 days.
The speed and strength of demand in the market has pushed rents up to 8.6 per cent outside London, and they are up more than 10 per cent in the North West, North East, the East Midlands and Wales.
The available stock shortage is most pronounced in suburban and rural areas, which has led to a shift in the make-up of total available properties on Rightmove.
Of all the available rental properties on Rightmove, 64 per cent of them are now in urban locations, a jump up from 48 per cent pre-pandemic.
The proportion of available properties that are in the suburbs has dropped from 46 per cent to 33 per cent, while rural areas have declined from 6 per cent to 3 per cent.
|Proportion of all available rental stock August 2021||Proportion of all available rental stock Feb 2020|
Tenants looking to move are seeking out bigger flats, leading to the hottest competition for three and four-bedroom flats. Competition for a four-bedroom flat is up by 131 per cent, and up by 124 per cent for a three-bedroom flat.
Competition within the flats market overall is up 95 per cent on average than in September 2020, compared with a 37 per cent increase for houses.
Rightmove’s Tim Bannister said: ‘A year of various lockdowns saw many city centres hit with either a complete standstill in rental growth, or falls of more than 10 per cent in some cases, as tenants moved further out or back in with family temporarily.
‘But as society opened up again cities have not only bounced back but are now seeing strong rental growth, fuelled by increased tenant demand and limited available stock.
‘It’s still easier to secure a place in a city centre than in some of the hottest suburban and rural rental markets right now, but as more tenants boomerang back to busier locations this is likely to change.’
|Regional||Price Q3 2021||QoQ||YoY|
|East of England||£1,289||4.0%||8.4%|
|Yorkshire and The Humber||£812||4.1%||8.0%|
He went on to explain that the shortage of rental properties in the market has led to Rightmove recording the fastest pace of rent rises in a year.
‘There are finally green shoots of growth in London’s rental market, with the first annual rise since before the pandemic started,’ he said.
‘Demand is notably up in London compared with this time last year, another sign that people are reconsidering where they want to live.’
Meanwhile, The Deposit Protection Scheme published its rental data showing that the average rent in Britain increased by £14 – or 1.74 per cent – from £804 to £818 during the three months from July to September.
The scheme’s Matt Trevett said: ‘Despite the roll-out of the coronavirus vaccination programme and the lifting of lockdowns, it seems that tenants are still prioritising more living space and are willing to pay for it.’
But he added: ‘The last quarter’s rent increases across all property types and most regions suggests a strong return of demand from tenants as employees start to go back into offices and students attend University in person this academic year.’