Posts with tag: rental growth

Outer city rental markets continue to show stronger growth vs inner city

Published On: November 1, 2021 at 9:59 am

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Rental homes in outer city areas have seen stronger growth over the last year, while inner city rental properties continue to command a higher monthly rental income, says buy-to-let specialist Sequre Property Investment.

Its research involved an analysis of rental market data for London, Manchester and Birmingham, revealing how it differed when comparing inner and outer city area.

Sequre Property Investment reports that inner city rental markets attract the strongest levels of monthly rent. On average across all three cities, the monthly cost of renting within an inner city area is at £1,152 versus £908 per month in the outer city market, highlighting a difference of 27% or £244 per month.

The biggest difference has been recorded in London, where rents across the inner city rental market are 37% higher on average. In Manchester there was an increase of 26% and in Birmingham it was 9%.

Looking at annual rental growth, however, it has remained largely flat in the outer city areas, while across inner city rental areas it has fallen -4.4% in the last 12 months.

Manchester has performed the strongest, with inner city rental values remaining largely unchanged in the last year, while across the city’s outer rental market values have climbed by 3.7%. In Birmingham, outer city rental values are up 2.2% versus a marginal 0.3% uplift across the inner city.

London’s rental market has struggled across the capital, with only a 1.1% increase in rental values across outer city areas and a -7.8% drop across inner city areas.

Daniel Jackson, Sales Director at Sequre Property Investment, commented: “It’s clear inner city rental markets are still struggling due to the decline in demand caused by the pandemic, despite a gradual return to normality from a social standpoint and with regard to the workplace.

“This is particularly evident across the London market, where rental values have plummeted across inner city areas, while they’ve also struggled in outer city areas. 

“The good news is that elsewhere, outer city rental values are on the up, with both Manchester and Birmingham seeing very healthy levels of growth. This suggests that tenants are now starting to make their return and this is a trend that should soon reach our city centres and help boost values across inner city rental markets.”

The current rental values for inner and outer city rental markets and the inner city rental premium

CityInner city average rent 2021 (per month)Outer city average rent 2021 (per month)Inner city rental price premium
London£1,874£1,37237%
Manchester£838£66726%
Birmingham£743£6859%
Average£1,152£90827%
Data sourced from the Office for National Statistics – Private rental market summary statistics

The current rental values for inner and outer city rental markets and the annual change across both

CityInner city average rent 2021 (per month)Inner city annual rental changeOuter city average rent 2021 (per month)Outer city annual rental change
London£1,874-7.8%£1,3721.1%
Manchester£8380.0%£6673.7%
Birmingham£7430.3%£6852.2%
Average£1,152-4.4%£9080.1%
Data sourced from the Office for National Statistics – Private rental market summary statistics

Rents in London set to fall by 3% by the end of 2017

Published On: July 13, 2017 at 1:57 pm

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Typical rents across London are predicted to fall by 1% and 2% in 2017, according to the latest report from Hometrack.

In addition, rents in the rest of England and Wales are forecasted to increase by 2%-3%. The best of this growth is expected to be in the Midlands and in the East of England, where rents are currently increasing at near 5% per year.

Residential Growth

The report points out that residential growth during the last decade has ranged from between 45% to -7% across UK regions. This variance can largely be attributed to local and economic factors.

Rental affordability, somewhat unsurprisingly, is worst in London. On the other end, it is the best for a decade in regions outside of the South of England.

While demand for rental property has grown, the impact on rents varies.

Assessing asking rents from 2004 onwards across England and Wales, the analysis reveals that rents slipped between 6% and 12% during the financial crisis. During this period, accidental landlords increased supply while falling employment led to a fall in demand.

Capital Gains/Pains

Since 2010, rental growth at a national level outside of London, has mainly tracked the growth in typical earnings with the growth in rents averaging at 2.7% per annum.

London has seen higher levels of rental growth since the year 2010- averaging at 4.5% per annum. There have been two periods of weaker inflation and now in 2017. Large employment growth in London during this seven year period has led to an increase in rental demand.

What’s more, high house prices and stricter mortgage regulations have made the playing field harder for first-time buyers to make the step from renting to buying.

Rents in London set to fall by 3% by the end of 2017

Rents in London set to fall by 3% by the end of 2017

Earnings

Taking the results of the last decade in context, while rents have risen by 45% in London and over 20% in the South, rents elsewhere have been largely flat, with smaller growth in employment and earnings failing to offset the fall in rents seen in 2008/09.

At national level, rental affordability has been largely stable in the long run. Rents have accounted for between 27% and 32% of gross annual earnings during the last 12 years.

Over the period, there have been clear differences in affordability across the UK , with Wales, the Midlands and Northern regions seeing the most attractive affordability in comparison to stretched affordability in London.

Looking to the future, the report suggests that there is likely to be a tightening of rental supply during the next year, in order to support rent levels, particularly in London.

Rental growth was subdued in May

Published On: June 7, 2017 at 11:50 am

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The most recent report from Landbay has shown that UK rental growth rather flat-lined during May.

Rental growth increased by 0.02% over the month – the slowest pace in more than half a decade. In addition, this was a fraction of the five-year average growth total of 0.14%.

Slowdown

The capital continues to be the main region driving the slowdown. Rents in London dropped by -0.94% year-on-year to May, in comparison to growth of 1.62% for the rest of the UK.

Rents have now slipped for a whole year in London – a 12 month decline in demand but greater supply- with homeowners opting to rent out properties until the sales market picks up.

In fact, London was the only region to see rents fall in May, with seven of twelve regions ending the month with a slower rate of growth than in April.

Rental growth was subdued in May

Rental growth was subdued in May

Delays

John Goodall, CEO and founder of Landbay, observed: ‘The election is one of many external factors influencing activity in the buy to let market at the moment. Yes, uncertainty about the future of the UK will cause some people to delay a decision to move, but affordability pressures are also starting to pinch the pockets of renters across the country. Wage growth is now lagging behind inflation for the first time since mid-2014, and with less money to spend on such a major monthly outlay, renters will be factoring this into their tenancy decisions.’[1]

‘On the supply side, a wave of new rental properties caused by last spring’s hike to Stamp Duty, together with falling house prices, will no doubt both be playing a small part in the ongoing softening of rental growth. Nevertheless, barring a major surprise from either the election or the Brexit negotiations, long term population and construction trends suggest that rents will soon be growing faster than inflation again,’ Mr Goodall added.[1]

[1] http://www.propertyreporter.co.uk/landlords/rental-growth-flat-lines-in-may.html

 

Manchester still a hotspot for buy-to-let

Published On: June 5, 2017 at 8:57 am

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New research from Armistead Property has revealed that Manchester remains one of the top 10 places in the UK for rental growth.

Average yields in the city were found to total nearly 9%.

Manchester Rents

The top postcode area in terms in rental yields in the region was M6, which covers Pendleton, Claremont, Langworthy and Salford. Rental yields here average at 8.84%, with typical monthly rents of £1,034.

With this postcode area situated close to the middle of Manchester and the University of Salford, this postcode region is popular with students and young professionals.

The M14 postcode area, covering Moss Side, Rusholme and Fallowfield, sees average rents of just over 8%. Once again, this postcode is popular with students-due to its close proximity to the University of Manchester campus.

Other postcode regions of the city offering good returns are M5 and M38, offering returns of 8% and 7% respectively.

Revival

Peter Armistead, Director of Armistead Property, observed: ‘Manchester has undergone a revival following significant investment, which has funded major regeneration and brought new jobs to the powerhouse of the North. Manchester has seen £800 million invested in the Airport City, £235 million for the Sir Henry Royce Institute for Advanced Materials and The Factory, with £110 million dedicated to the arts. Employment in the city is forecast to get an additional boost, with expected growth of 3.8% between 2015 and 2020.’[1]

‘It’s no surprise that both UK and international investors are queuing up to purchase BTL property.  Manchester beats London hands down on affordable property prices. Over the last three years, 45% of residential sales across the city were completed for less than £125,000. Manchester also offers much better rental yields, with between 8-9% in some postcodes, compared with an average of 4-6% in London,’ he continued.[1]

Manchester still a hotspot for buy-to-let

Manchester still a hotspot for buy-to-let

Young Demand

Moving on, Mr Armistead noted that, ‘There has been a surge in demand for rental accommodation with increasing numbers of students and young professionals working, or studying in the City. Manchester’s population is growing and is expected to surpass three million by 2035.’

‘The housing market in being bolstered by a major regeneraton north east of Victoria station, where 8,000 new homes are being built over the next 10-15 years. There’s also a £1bn plan for another 8,000 homes, including the conversion of the Murrays’ Mills and a further 3,000 homes on the former ITV Granada studios at St John’s Quarter,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/manchester-remains-a-top-btl-hotspot.html

 

Millennials spending over one-third of their take home pay on rent

Published On: May 5, 2017 at 10:32 am

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According to the most recent Rental Index from Landbay, young tenants are spending one-third of their monthly take home pay on rent.

Those residing in a three-bed property spend 30% of their pay on rent, while those in a two bed spend 39% on average. For those living alone, rental payments hit them hard in the pocket, with them spending an average of 69% of their take home pay on rents!

Rents

For tenants aged between 18-39 renting alone, 69% of their monthly post tax-income of £1,447 is spent on £1,012 worth of rent.

For two people sharing a house, overall rent of £1,152 amounts to 39% of each tenant’s income.

Rents have continued to spiral in the last five years, rising by 9% across Britain since April 2012. London has seen rental growth of 8% over the same period. This of course is impacting on those struggling to save for a deposit, despite the pace of rental growth slowing from August 2015, from 2.66% and 0.82%.

Despite rents beginning to show signs of stabilising for young people, spending such a high percentage of their take home pay on rent leaves them little to play with for essentials, never mind for savings.

Millennials spending over one-third of their take home pay on rent

Millennials spending over one-third of their take home pay on rent

Tough

John Goodall, CEO and founder of Landbay noted: ‘For intermediaries, this generation is the future of their client base, a generation who will face a tough financial journey.’[1]

‘Whether these millennial tenants are renting as a stepping stone on the way to home ownership – or in some cases choosing to rent for life – this generation are relying on a well-served buy-to-let market to ensure rental growth doesn’t become unbearable. What is now needed is some firm Government commitment to improving standards, affordability and supply of rental properties,’ he continued.[1]

Concluding, ‘Institutional investment and the subsequent growth and professionalism of the private rental sector are already helping control rental growth and improve living standards for renters, so we hope to see some clear plans outlined in this month’s party manifestos ahead of the General Election in June.’[1]

[1] http://www.propertyreporter.co.uk/finance/millennials-spend-over-a-third-of-take-home-pay-on-rent.html

 

Rental growth slows in the UK during Q1 of 2017

Published On: April 10, 2017 at 1:34 pm

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An increase in property options for tenants has led to a slower rate of rental growth in 2017 to date, with asking prices rising by just 1.8% year-on-year.

This is the smallest rate of annual growth since the final quarter of 2014 and less than half of the rate recorded one year ago, according to the most recent report from Rightmove.

Ups and downs

In addition, the data shows that for the first time since 2014, asking rents outside of London fell by 0.4% in the opening quarter of the year. This takes the average rent per month in the capital to £768.

Greater London saw average asking rents in the first three months of the year hit £1,937 per month-a rise of 1.5% quarter-on-quarter. Annually, falls have gone from a decline of 4.4% during the fourth quarter of 2016 to 4.2% in the first quarter of 2017.

What’s more, the report shows that new rental properties coming onto the market have been rising since the rush to purchase before last April’s 3% stamp duty hike. There are 12% more available properties for tenants to select from as opposed to the first quarter of 2016.

Lets

Rightmove also looked at the time taken to let a property, based on agents marking properties as let agreed on the portal. Nationally, this time is 10% longer on average than in the same period in 2016.

The time being taken to secure tenants has risen in all areas, with the exception of Wales, which has actually decreased by 5%.

Head of lettings at Rightmove, Sam Mitchell, said: ‘The supply boost following last year’s buy to let frenzy in the first few months of the year has continued through to 2017, introducing more competition in the market for letting agents trying to secure suitable tenants for their landlords’ properties.’[1]

Rental growth slows in the UK during Q1 of 2017

Rental growth slows in the UK during Q1 of 2017

‘This extra choice for tenants in many areas has inevitably led to properties taking longer to let than this time last year. However, agents are still reporting that well-priced properties in popular areas are letting quickly,’ Mitchell continued.[1]

Concluding, Mitchell said: ‘Agents’ properties need to stand out even more than before, so carefully considering how your property is presented is really important. Now might be the right time to encourage landlords to give the place a lick of paint or some new furniture to give them the edge to help secure the right tenant.’[1]

[1] http://www.propertywire.com/news/uk/rental-growth-slowed-uk-first-quarter-2017/