The UK’s rental market has been growing in strength for some time, bringing investors strong returns as a growing number of people start to favour this way of life over owning their own property.
And now, a new report has looked into the strongest areas of the country for the rental market, and it found that regional cities – those outside of London – are the best performers nationwide. Knight Frank looked at the way the rental market has changed in the last decade, and found that cities outside the capital have driven growth.
In the past ten years, the English Housing Survey showed, there has been an increase in urban areas from 80 per cent to 86 per cent in terms of the number of people who live in rented property – this has mostly been driven by cities like Manchester, Liverpool, Leeds, Sheffield and Nottingham, all of which have seen investors get strong demand from tenants.
The survey also showed that demand for homes in these cities has increased steadily over the course of the last decade, both thanks to the constraints in affordability and the increasing sentiment that has seen people choose to rent rather than buy thanks to the flexible way of life this can afford them, particularly for younger career-driven people in urban areas.
In addition to this positivity, it was revealed that landlords are now able to attract tenants to live in their rental homes for longer periods of time. Whereas a decade ago, only 20 per cent of tenants would stay in one place for between two and four years, this has risen to a quarter in the latest survey. This is a positive for landlords, who are able to secure returns for longer, and crucially without void periods, if they have a tenant for a longer period of time.
So strong is the rental market, Knight Frank also said, that there has been a real climb in the last decade in institutional investors putting their money into the buy-to-let market. In the last 12 months, in particular, there has been a climb in the number of these entities investing in this market in Birmingham and Manchester.
“The increasing entry of institutional investors into the market is a significant positive factor for the PRS, which should lead to an increase in the supply of good quality, well managed rental accommodation. The design of the units within these schemes is aimed at the private rented sector, with appropriate layouts, specification and provision of services being key to the success of these schemes,” the report concludes.