UK Rental Hot Spots - The Urban Revival
There has been a shift in demand with UK renters now looking for homes with good connectivity, driving up rental prices.
Rental hot spots include London and outside of the capital, the cities of Manchester, Edinburgh and Reading.
Rental prices have continued to increase in cities and towns where there is insufficient supply of properties to rent and they also benefit from excellent connectivity to city centres, with the urban revival where workers are returning to office working.
Highest Rental Price Growth Forecast for Smaller Properties
Smaller properties are now expected to see the strongest levels of rental growth due to demand from tenants who are looking for an affordable property close to a city centre that is also more energy efficient and cheaper to live in, amidst the cost of living crisis.
During the pandemic, there was a trend of renters demanding larger properties as they were working from home, moving further out of city centres for properties with gardens and green space. This current trend is a reversal of this “race for space” as renters re-assess their priorities.
Rental Values Increase up to 5.9% in a Quarter
Outside of London, rental prices increased the most in cities and regional towns, increasing up to 5.9% in a Quarter and 8.6% year-on-year. Regional rents grew 2.5% between April to June 2023, in comparison to 1% in the previous Quarter.
Cities with the Highest Quarterly Rental Growth
- Edinburgh = 5.9%
- Birmingham = 5.6%
- Reading = 4.1%
- Manchester = 4%
Meanwhile, rental growth has begun to slow on an annual basis in some of the most expensive areas of London. Despite increasing concerns about mortgage interest rate rises and increased price sensitivity, the residential property sales market in prime London has remained resilient in the second quarter of 2023.
5-Year Rental Growth Forecast – up to 21.6% Rental Growth
- Manchester = 21.6%
- Central London = 19.9%
- Birmingham = 19.3%
- Bristol = 18.2%
- Greater London = 17.6%
- Edinburgh = 16.4%
- Liverpool = 15.9%
- Leeds = 15.9%
- Glasgow = 15.3%
Source: JLL UK Residential Forecast
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