OnTheMarket.com finds some of the UK’s best value neighbourhoods to rent your next home.
Rising demand usually means higher prices, so with sales transactions down, there is an expectation among experts that the rental sector will outperform sales in 2017.
A recent survey by the Royal Institution of Chartered Surveyors found that a clear majority of its members were reporting rent increases rather than a standstill or a fall. Tenant demand is now outpacing supply across most of the UK.
“As first-time and second-stepper buyers struggle to access or trade up the market, demand for rental growth will increase, which means that rental growth will be stronger than house price growth, both in the short term and over a five-year period,” says Lucian Cook, Head of Residential Research at Savills. Average rents in the UK are forecast to rise by 2.5 per cent in 2017, according to Savills, while in London they should increase by three per cent.
But if London leads, other cities are not far behind, and in the medium term rents could rise. Savills is predicting that rents in Bristol will rise by 27.5 per cent over the next five years, which is even higher than its projection of 24.5 per cent for London. Birmingham (17 per cent) and Manchester (17 per cent) are also set on an upward trajectory.
“High housing and office costs in London make these regional cities look increasingly attractive, particularly to the most highly skilled employees,” adds Mr Cook. “This demand has been largely unmet by new stock, supporting rental value growth.”
Other experts agree that rents are likely to rise this year. “The wider UK rental market looks relatively positive, with modest rental growth expected,” explains Liam Bailey, Head of Global Research at Knight Frank, which is predicting average rental increases of 1.2 per cent in 2017.
But the situation is patchy. In Prime Central London West – areas such as Notting Hill, Belgravia and Kensington – Knight Frank is expecting rents to fall by 6.5 per cent during the course of the year. For those who want to live in Central London, it is the perfect time to rent a property.
The outlook is different in Prime Outer London, from Fulham, Wimbledon and Wandsworth to Wapping and Canary Wharf. Here Knight Frank is expecting rents to rise by 1.5 per cent in 2017.
Possible rental hotspots in other parts of the country are likely to be dictated by local factors. In the West Country, Exeter is worth watching. “Rents are not going up strongly due to limited wage increases,” adds Simon Cooper of Stags in Exeter. “But there is continuing strong tenant demand and a shortage of properties.”
As with the property market generally, rental prices respond to improvements in infrastructure, creating local rental hotspots. A good example is North Oxford. “The opening of the new Oxford Parkway station last year certainly helped the property market,” explains Giles Lawton, Head of Strutt & Parker in Oxford. “The station has had a huge impact on the suburbs of Summertown and Kidlington.”
And if the trends of 2015-2016 continue, Scotland is likely to see some of the fastest rent increases in the UK in the coming year. Scottish rents rose by 11.4 per cent over a 12-month period, according to figures by HomeLet. The East Midlands, where the rise over the same period was 7.9 per cent, is another area experiencing significant rental growth.
Tenants had some good news in the Autumn Statement when the Chancellor (Philip Hammond) announced a ban on up-front tenant fees from letting agents. And if tenants hunt around, they can find good value for money in many parts of the UK. Attractive places to rent at affordable prices in 2017 include:
– Bexley, in South East London, the most affordable London borough, where the average house costs just over £1,000 a month to rent.
– Havering, in East London, another relatively affordable borough, where the average house costs just under £1,100 a month to rent.
– Didsbury, in Greater Manchester, a popular suburb where you can rent a good two-bedroom apartment for around £650 a month.
– East Bristol, where you could rent a three-bedroom property for around £900 a month.
– King’s Heath in Birmingham, where you can rent a three-bedroom house for around £850 a month.
– Northumberland, where the average monthly rent is £280.
– East Lothian, in Scotland, where the average monthly rent is £230.
With such a changing residential market, there has never been a more difficult time to make predictions. But there are clearly some affordable spots across the country which won’t break the bank.
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