Rental Market Report UK 2022

Strongest Rental Market Growth 

Earlier this year, rents across the UK inflated to £830. Rents have now climbed to £995, the highest rental market growth since the Global Financial Crisis. These numbers continue to rise, which is a delight for landlords and bad news for tenants. Across the UK, inflation intensifies. As a result, people are struggling to climb onto the property ladder. This is due to several factors, including the shortage of properties available to buy, combined with the elevated levels of housing demand.

Demand Heightens in Rental Market

Levels of demand in the rental market continue to intensify. Consequently, these propelling rents are magnifying financial pressures for renters. In a report released by Zoopla, the average rent in the UK has rocketed to an astonishing £995, this takes the annual rental market growth rate to 11%. Furthermore, the graph shows that although rents in London have spiked by 15% this year, the growth is not sustainable. Analysing rental market trends over the decade, you can see that levels spike and plummet dramatically in the Capital. If you are looking for a not-so-risky investment, avoid investing in London. Let me explain why.

Firstly, property prices in London have peaked at an extortionate £712,707! To highlight the sheer difference in market affordability, this is £344,093 above the average UK house price. As the HPER (house price to earnings ratio) surges, many buyers are turning to more affordable areas of the UK. Interestingly, the average rent now counts for 37% of a renter’s gross earnings. In London, the percentage of income spent on rent has inflated to 52%! The rising costs are affecting affordability, thus, driving people out of London and into more reasonable property markets.

Look to More Affordable Markets

Investing in an affordable area is not necessarily unbeneficial. Investing in a cheaper property could allow you to secure higher rental yields in the short term. For instance, you could purchase a property in Hull’s vibrant and beautiful historic city centre for only £154,571. For properties such as these, you would require a smaller deposit. In addition, the area is rich with potential tenants driving rental demand. Therefore, landlords can expect to achieve excellent rental yields.

But how about capital appreciation? Will your property increase in value over time? In this case, yes. In Hull, there are several regeneration schemes underway. Many developments sold exclusively by CityRise are within the regeneration zone or less than half a mile away. These strategically placed developments will demonstrate substantial capital growth. The positive influence on house prices will be driven by the improvements in the amenities in the area. Furthermore, more businesses will be attracted to the area, acting as a magnet for more skilled workers who will require rented accommodation.