A number of city centres across the UK are experiencing double digit growth in rents, after a year of decline, as tenants "boomerang" back to cities. At the same time many renters are struggling to keep up with payments as they continue to feel the effects of the pandemic.
Rightmove revealed that some city centres have not only bounced back from the declines recorded during the year since the pandemic started, they have now hit double digit growth and are outpacing the national average.
“A year of various lockdowns saw many city centres hit with either a complete standstill in rental growth, or falls of over 10% in some cases, as tenants moved further out or back in with family temporarily," said Rightmove’s director of property data, Tim Bannister.
"But as society opened up again cities have not only bounced back but are now seeing strong rental growth, fuelled by increased tenant demand and limited available stock."
Rightmove's report showed that high demand and properties being let out quickly has led to rents outside London rising at the fastest rate ever recorded by the property website — up by 8.6% on a year ago.
In Bristol, Nottingham and Glasgow, rents are now over 10% higher than pre-pandemic level and in London rents are up annually by 2.7% for the first time since the pandemic started.
Richard Davies, head of lettings estate agent Chestertons, said: "The race to find a rental property in the capital is set to become more competitive, putting landlords firmly in the driving seat of price negotiations.
"With demand outstripping supply, rents are now starting to increase and — if limited availability of rental properties continues — it won’t be long before rents return to 2019 levels.”
Competition among tenants for flats is up by almost double (95%) that of a year ago, the biggest jump of any property type, with three and four bed flats seeing the hottest competition.
Total rental demand is now up by 39% compared with the same time in 2019, and up by 11% compared with September last year.
This demand has led to properties being snapped up at the quickest rate ever recorded — an average of 17 days.
Meanwhile, a separate report has shown that renters’ resilience has been pummelled by the pandemic, with inflation posing a new threat.
A survey by the Department for Levelling Up Housing and Communities showed that 7% of private renters were behind on rent in April to May, up from 3% before the pandemic.
Around 9% expect to fall behind in the next three months.
Sarah Coles, personal finance analyst, Hargreaves Lansdown said: "Renters live far closer to the edge of their finances at all times, because they have to spend so much of their income on rent”.
"There’s every chance that inflation could throw a spanner in the works. And while we’re struggling to get back on our feet, we also have to wrestle with rising prices across the board, that threaten to throw our budgets back into disarray," she added.
"Among renters it means more people can’t ever imagine buying a house of their own."
At the outset of the pandemic 59% of private renters thought they would eventually buy, but now only 45% do.
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