Thursday, October 1, 2020
Real Estate

UK rental growth high in regional cities

Increased demand and falling supplies drive UK rental growth at the end of 2019, with Nottingham, Bristol and York topping the list

Nottingham, Bristol and York led UK rental growth in the fourth quarter of 2019, according to a report Wednesday from Zoopla.

Sellers held on their decision to sell amid the recent uncertainty in the property market, resulting in UK rental growth.

In each of the three areas, average monthly rents grew more than 5% at the tail end of 2019, compared to the same period in 2018. At the same time, the cities had below average levels of available rental stock, the online real estate portal said.

Low stock was the driver of increasing rents across the U.K. throughout 2019.

New and existing landlords have been deterred from the market by a number of tax and regulatory changes, including 2016’s 3% surcharge to the stamp duty tax for second and buy-to-let home purchases, Mansion Global previously reported.

New investment by landlords has fallen since the introduction of tax changes in 2016 and this has been felt most keenly in southern England where property values are highest and yields lowest, Richard Donnell, research and insight director at Zoopla, said in the report. He added that this is creating scarcity and explains why rents are rising in the face of increased rental demand as levels of employment continue to grow.

In Nottingham, in the East Midlands, rental growth increased 5.8% to an average of £679.

In Bristol, in South West England, and York, in Yorkshire and Humber, the relatively high cost of buying a home is further underpinning rental growth, according to Zoopla. The cities logged rent increases of 5.5% and 5%, respectively.

In the capital, rents rose 2.8% in the fourth quarter to £1,577, marking the highest rate of increase in almost four years.

Since 2017, available rental stock in London has dropped by a fifth. Though the fall in supply is supporting higher rental growth—as is the case across the U.K.—stretched rental affordability in London is limiting the level of increases, according to Zoopla.

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