Record-High Rents
The UK rental market has reached new heights in Q2 2024, with significant trends that Asian investors should consider. The average rent outside of London has risen to a record £1,314 per calendar month (pcm), reflecting a 7% increase from the previous year. In London, the average rent has climbed to £2,661 pcm, marking a 4% rise from last year. Although rent growth in London has slowed since the 16% peak in 2022, it remains a critical factor for investors looking at urban properties. Here we look at UK Rental Market Trends YTD 2024.
Tenant Demand and Property Supply
The market remains highly competitive, with each rental property receiving an average of 17 enquiries. Although this is a decrease from 26 enquiries in 2023, it is still more than double the eight enquiries per property seen in 2019. This high demand is coupled with a gradual improvement in rental property supply, which is 14% higher than last year. Despite this, the number of available rental properties is still 20% below pre-pandemic levels, indicating a continuing shortage.
Performance of Key UK Cities: London, Manchester, Birmingham, and Liverpool YTD 2024
London
In Q2 2024, London rents continued to climb, reaching an average of £2,661 pcm, which is 4% higher than the previous year. Although the growth rate has slowed since its 16% peak in 2022, London remains the most expensive rental market in the UK. Inner London saw average rents of £3,132 pcm, a 2.4% annual increase, while Outer London averaged £2,318 pcm, reflecting a 5.1% rise.
Manchester
Manchester’s rental market has also experienced growth, though specific figures for Q2 2024 are not detailed in the provided document. The city’s dynamic economy and ongoing development projects continue to make it an attractive location for both tenants and investors. The general trend in the North West, which includes Manchester, shows a robust performance with significant annual rent increases in cities like Blackburn and Preston.
Birmingham
Birmingham remains a key market in the West Midlands. The region reported an average landlord yield of 6.4% in Q2 2024, up by 0.5% from the previous year. Lichfield in Staffordshire, part of the greater Birmingham area, saw a notable annual rent increase of 13.6%, with average rents rising to £1,032 pcm.
Liverpool
Liverpool, part of the North West region, continues to attract tenants with its relatively affordable rents compared to other major cities. The North West region, including Liverpool, reported an average landlord yield of 7.0% in Q2 2024, an increase of 0.5% from the previous year. The city’s rental market benefits from strong demand and competitive yields, making it a favorable option for investors.
Regional Rental Trends YTD 2024
Certain areas have seen substantial rent increases. For example, Walton-On-Thames in Surrey experienced a 30.4% rise, with average rents reaching £1,960 pcm. Blackburn in Lancashire saw an 18.1% increase to £711 pcm. Such hotspots highlight potential areas for investment, particularly for those seeking higher yields.
Landlord Yields
Yields for landlords vary across regions. The North East and Scotland offer the highest yields at 8.3% and 8.5%, respectively. Other regions such as the North West and Yorkshire and The Humber also present attractive yields, making them favorable for investment.
Government Initiatives and Market Outlook
Recent government actions suggest potential improvements in the rental market, including plans to build 1.5 million more homes. This could enhance the availability of rental properties and ease the pressure on the market. However, further support for landlords, such as incentives for energy-efficient upgrades, is crucial for maintaining a balanced and stable rental market.
Conclusion: UK Rental Market Trends YTD 2024
For Asian investors, the UK rental market presents both opportunities and challenges. The record-high rents and strong tenant demand indicate robust investment potential. However, the continuing supply shortages and evolving government policies require careful consideration and strategic planning.
By understanding these trends and leveraging local insights, investors can make well-informed decisions that align with their long-term goals.
For more detailed information and personalized advice, consider consulting with Walpole and Partners, who specialize in helping Asian investors navigate the UK property market.
