Lettings Market Update

Lettings Market Update

As a landlord, you need to know if the market has a sound footing. For future investing, it’s vital to get insight into the potential opportunity. We share the key facts from across the UK.

Demand/supply imbalance may gradually reduce in 2022

  • The level of demand may start to fall back this year, creating more competition and a slow down in rental growth.
  • Affordability remains broadly in line with the 10 year average so there is flexibility in rental growth for those with more disposable income.
  • City centre demand now outpaces that of commuter zones, clear evidence of a return to 'normality' in these locations in both work and leisure arenas.

The upward rise in demand and the lack of rental supply has seen rents increasing at the fastest rate in years. London has seen rental value growth gather pace, however due to the large falls it experienced during the pandemic it is only now just seeing rental values out-perform where they were back in March 2020.

8.3% rental growth across the UK confirms a continued rise

8.3% rental growth across the UK confirms a continued rise

Upward pressure on rental prices means it could be an opportune time to be a landlord. Could you be earning more from your property?

An 8.3% rise in the average rent across the UK (including London) over 12 months continues to sustain the upward trend, with average rental values reaching new record highs. This is due to the continued surge in demand as the economy continues to open more fully with a particular impact in city centres where there is a chronic shortage of supply. This impact is being felt far and wide across the UK. The 10.3% rental value rise in London serves to dramatically highlight this point.

10.3%

Rental value increase in London

9.5%

Rental value increase in the South West

8.0%

Rental value increase in the East Midlands

8.0%

Rental value increase in the North West

The surge in demand has gathered pace in cities

The surge in demand has gathered pace in cities

As city centres have firmly opened up again, a surge in demand vs short supply has seen a rapid rise in rents.

Previously, it was the commuter belt locations that were experiencing the greatest growth for cities, as people looked for more space and working from home opportunities increased. But now more central locations are seeing a bounce back in demand too. This is being fuelled by a return to office working and the return of students and international travellers. Rental rises in city centres are now outpacing those of the suburbs. Supply remains extremely constrained, with a reduced number of landlords, and tenants staying put to try and get better deals on their existing rental renewals.

11.0%

Rental value increase in London inner boroughs

7.2%

Rental value increase in inner Edinburgh

9.6%

Rental value increase in inner Birmingham

9.6%

Rental value increase in inner Manchester

Rental demand soars – but stock is down

Rental demand soars – but stock is down

The growth in demand and lack of supply remains a significant factor, as it has done for over a year now.

Over the short-term, the bounce-back in demand quickly impacted available stock levels of rental properties. However, longer term there are also challenges around landlord investment into buy-to-let, due to such aspects as additional taxation and regulation changes. The stamp duty holiday caused a short-term uplift in landlord activity, but not enough to offset longer term stock supply issues. The lack of rental properties will remain a feature of the market for the coming year and potentially beyond.

76%

Increase in rental demand in January compared to similar periods 2018-2021

39%

Reduction in stock in January 2022 vs similar period 2018-2021

14 days

The average time to let in December 2021, compared to 20 days in July 2020 – nearly a week faster

We're here to help

If you are a landlord looking to improve your rental yield, or you would like to find out more about your property’s rental value:

Statistics from the Zoopla Rental Market Report February 2022.