The property portal’s quarterly rental market report reveals that UK rents, excluding London, reached the highest rate of growth since 2008.
Fuelled by growing demand in the UK’s major cities, amid limited supply, rents are rising at over 5% year-on-year across the country, excluding London.
Monthly rents are averaging £790 per calendar month (pcm), up from £752pcm a year ago. This equates to renters paying an average increase of £456 per year.
At a city level, Manchester, Reading and Leeds have moved from negative to positive rental growth territory, while Wigan and Mansfield are leading the pack of accelerated rental growth with growth of 10.5% and 10% respectfully.
Meanwhile, rental declines in London have bottomed out as demand rebuilds amid the ending of lockdown and the reopening of offices and amenities. While annual rental declines reached -9.8% in London in February, they recovered to -3.8% in July, signalling an ongoing return to stability.
Demand for rental properties rose by 33% in August compared to the same period last year, and is tracking at 79% above the 2017-19 average, driven by the post-lockdown reopening of cities, and a return among tenants to the city rental landscape.
While the rental market is seasonal, with July and August proving busy historically, current activity levels are unusually high, precipitated by students and returning city-dwellers.
That said, in August, the stock of property available to rent was around a third below where it would be typically at this time of year. The recent surge in renters has ultimately eroded supply, which was already declining.
With supply and demand so out of kilter, Zoopla reports that competition is fierce for rental properties.
The supply-demand imbalance has resulted in the rental market moving at its fastest rate since 2016. At this present time, rental properties are securing renters, on average, within 15 days of coming to market.
Inner cities are showing the sharpest rise in demand, with Edinburgh registering the highest growth in demand levels since February of this year.
While demand for rental houses outpaced demand for rental flats at the height of the pandemic, demand for both property types is pegging level in another sign of demand in central cities, where flats tend to make up a larger proportion of stock.
Rental demand will remain higher than usual in the coming months, in line with seasonal trends, and the lower levels of stock will support stronger rental growth through the rest of the year, according to Gráinne Gilmore, head of research at Zoopla.
She commented: “The rental data illustrates how city life is resuming – with a sharp increase in demand in central cities.
“The strong levels of rental demand seen across the UK during August will moderate in line with seasonal trends, but overall demand for rental property is likely to remain higher than usual in the coming months, amid this swing back to city life.
“As ever, much will be dependent on the extent to which the current rules around Covid continue as they are. But given no deviation from the current landscape, the demand for rental property, coupled with lower levels of supply, will continue to put upward pressure on rents. In London, this will translate into rental growth returning to positive territory late 2021 or early 2022.”