Rental market - demand surges, rents rise

Rent increases reach a 13 year high as demand in city centres doubles. For the first time since the onset of Covid, London rents are rising.

The quarterly rental market report from Zoopla shows that outside of London, average rents have increased by 6% over the past year and by 3% over just the last quarter, driven by the return of workers to the city centres and by students to universities.

The South West saw the biggest increase in rental growth at 9%. Areas where rents have historically been most affordable have seen large increases, such as Wales at 7.7% and the East Midlands at 6.9%.

At the city level, Bristol and Nottingham were landlords' strongest performers, both registering figures of over 8% for the year.

In London, where rents have fallen every month since June 2020  the trend was broken with a modest rise of 1.6%, but remain slightly below pre-pandemic levels.

Surge in demand, lack of availability

Across the UK demand for rental properties is 43% higher than the five year average. 

Demand in the major cities such as Manchester and Leeds has doubled since the first quarter as city centre workers return after the easing of pandemic restrictions.

Manchester rental market running white hot

Birmingham has seen a surge of 60% and in London, demand is up by 50%. Renters are seeing fierce competition and properties are taking an average of only 15 days to rent.

The increase in demand is not being met. The number of available properties is 40% below the average before lockdowns began. 

Longer term outlook

In the short term the low availability will maintain rental costs at or above current levels but will likely moderate over the next two to three years.

Hamptons' rental forecast for 2022 to 2024 -

	2022	2023	2024
London	+1%	+1.5%	+3%
South	+3.5%	+2.5%	+2%
Midlands	+2.5%	+2%	+2.5%
North	+3%	+2%	+2.5%
UK	+2.5%	+2%	+2.5%