UK RENTS RISING FASTEST OUTSIDE LONDON
2016-12-13
Published by Select Property Group on 13 Dec 2016
The capital now has the slowest rate of growth in the country, as low supply in the north of England is driving yields for investors.
Summary:
- Residential rents in the UK are now growing the slowest in London
- Monthly rates are rising fastest in the north-west, north-west and Yorkshire regions of England
- While there's been a surge in stock in the capital, there remains a huge supply to demand imbalance that's driving yields for investors in cities such as Manchester
Should investors searching for a UK property investment that delivers the best annual returns still be looking in London?
Britain's capital now has the slowest rate of rent growth in the country, according to data from the latest monthly lettings index from Countrywide.
Just 12 months ago London boasted the fastest rate, but a flurry of new housing has dampened rental premiums. In November, for example, there were 32% more properties in London's private rented sector (PRS) over the same month in 2015, but tenant numbers rose by just 9%.
Yet while rental rates in the capital have been cut on 11% of homes over the last year, the cost of a new let everywhere else in the UK has risen by 3.1%. This growth is being driven primarily by the PRS in the north of England, where some 25% of tenants renewing contracts have seen their rents increase.
Key cities such as Manchester, home to the highest yields in the UK, has one of the lowest levels of PRS supply in the UK, despite a rising population and job growth rate increasing demand for rental accommodation.
"Since the gap between London rents and those in the rest of the country hit a high watermark in 2015, the gap has been gradually narrowing," said Johnny Morris, Research Director at Countrywide.
"The pressure on affordability and number of homes coming onto the rental market in the capital means that rents are likely to lag behind the rest of the country in 2017."