Rise in rental demand
- Published: Tuesday 16 February, 2021
- By: Commercial Trust
Rental demand in the UK’s suburbs has seen a sharp rise in recent months according to Zoopla’s quarterly rental market report.
The report showed that average rental prices have soared in towns with strong transport links to major cities such as Rochdale (+8.2%), Hastings (+8%) Southend (+5.8%) and Newport (+5.5%).
These so-called ‘halo’ areas have offered renters increased space to accommodate their new work from home needs. The proximity of these areas to nearby cities also ensures, that when the UK comes out of lockdown, commuting times to the nearby cities will be manageable.
Rental demand up 21% YoY
Overall, Zoopla has found that demand for rental properties in the UK is up 21% when compared to last year. Rents across the country, excluding London, have risen by an average of 2.3% this quarter, matching the level they were at pre-Covid.
Much of this increase in demand has been for houses, in many of the UK’s largest cities, including London, Leeds, Edinburgh and Manchester houses have been quicker to rent out than they were this time last year. Zoopla estimates that across the UK, houses are taking an average of 30% less time to rent out and flats 2% less than they did this time last year.
Grainne Gilmore, head of research at Zoopla said “The search for space among renters is coming across loud and clear from the data however, with houses in major cities now being rented out more quickly than a year ago. In most cases, flats are now taking longer to rent out.”
The firm estimates that the time taken to rent out a house in Leeds has fallen by 20%, whilst London has seen a 14% fall. Zoopla attributes these rises to the three UK lockdowns increasing renters demand for properties that offer more space for those working from home.
Gilmore suggested that flexible working is likely to continue past the end of the pandemic. With many businesses reporting no drop in productivity, when their staff work from home, Zoopla has predicted that the demand for properties with increased space won’t diminish any time soon.
Activity in city centres
Gilmore continued by stating that the rental outlook for the rest of the year in the UK’s city centres depends on how quickly the Covid vaccine is able to combat the virus’s impact. As businesses including those in the retail, leisure and entertainment sectors open up and economic activity increases, she predicts that rental demand for those areas is likely to increase.
Though London hasn’t seen an increase in demand for its rental property yet, its unique position as a world city means that when global travel eventually opens up, demand from both domestic and overseas renters is likely to soar.
“Changing working, commuting and tourism patterns were felt very quickly in the central London rental market. Now we are seeing the impact in other city centres, although on a more modest scale.
Gilmore finished by saying
“Balancing the rental declines in inner cities is the strong rise in rental growth in surrounding ‘halo’ areas and well-connected towns across the UK, reflecting stronger demand in many of these markets among a cohort of renters. Yet it is important to note that most demand among renters living in central cities is within the same area – some renters will have ties to an area through schooling, or non-office based work.”
Whilst the UK remains in lockdown to combat the spread of Covid-19, it’s encouraging to see that demand in large areas of the rental market is as strong as it was before the pandemic.
With the country’s vaccination programme making swift progress it will be hoped that as our cities open up again, demand in these areas increases similarly.
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.