New Study Indicates UK Rental Prices Are Robust & Growing

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Asking Rents Continue to Rise at Positive Levels in Most UK Areas

The UK has seen unprecedented rental growth over the last few years. Tenant demand rose dramatically amidst rising interest rates and inflation, which sent rents rocketing.

While many forecasters expect rental growth to settle down as affordability returns to the property market, the latest Home Monthly Market Snapshot shows continued healthy growth through most UK regions.

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How Much Are Rents Growing in the UK?

Home says asking rental growth is 2.1% above the March 2023 level. Northern regions – such as the North East and North West – enjoy a considerable year-on-year rise, which could be good news for buy-to-let returns. Supply is also on the rise in most areas.

For buy-to-let investors, there should be more investment opportunities in Liverpool, Manchester and Newcastle – where tenant demand remains high, particularly for urban apartments. A recent Shawbrook Bank study showed that a quarter of landlords saw city centre flats as a lucrative investment opportunity due to more people looking for homes close to the workplace.

However, rents are falling in the London property investment scene – and have done throughout most of 2024 – dropping 6.9% year-on-year on average. Scotland is also undergoing a similar drop. Both cases are due to oversupply in the regional rental markets.

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What Else Did Home Say About the UK Property Market?

On the sales side of the market, Home notices a surge in seller optimism, especially compared to last year.

According to this data, more vendors are committing to selling properties than usual, and housing stock levels are similar to those before the pandemic. This follows the recent Halifax House Price Index, which indicated that prices are reaching 2022 levels following a subdued 2023.

Currently, there isn’t an oversupply of properties, which would lower prices.

Additionally, Home reports that properties are selling faster, with time-on-market figures dropping to levels seen before Covid-19. They expect marketing times to reduce further in April and May.

For buyers, there’s good news: there’s more choice and lower prices in many areas compared to the peak in July 2022, especially in London, East Midlands, East, and the South West.

Buyers also feel more confident that any price corrections due to higher interest rates have already happened and that prices are less likely to fall in the near future.

Regionally, the North of England, Scotland, and Wales continue to show healthy time-on-market figures, correlating with positive annual price growth. In contrast, Greater London, East, and Southern regions are improving compared to 2019, indicating potential year-on-year price growth. The Midlands are expected to follow suit later this year.

We also have a collection of helpful buy-to-let area guides designed to help you understand different cities and towns in the UK: