The covid pandemic has led to a “two-speed” rental market in the UK, according to a recent report from Zoopla. And the opportunities for property investment companies have now changed. They have found that during 2020, apart from in London, rental yields have grown across the country – with rents in the north of England performing especially well. In contrast to regions outside of the capital, rents in London have dropped by 5.2% over the last 12 months.
London falls behind
Average rents outside of London grew by 0.7% between June and September. Whereas London rents actually fell by 3.2% during this time. This means the capital will have undergone an annual drop of 5.2%, which reverts rents back to 2014 levels.
The pandemic has had a major impact on London’s rental market that isn’t reflected in other parts of the UK. This is especially true in the north. With both residents and property investment companies now looking elsewhere to live and work, the eventual end of the pandemic is unlikely to reverse the city’s fortunes.
The first lockdown led people to reassess their residential requirements. Zoopla has found that space to work from home and easy access to outdoor space and parking have been some of the most popular search terms over the last few months.
Affordable properties with these kinds of amenities are more likely to be found in North England rather than in London. Property investment companies are also recommended to invest in properties with these features.
The north-east saw the strongest rental growth in the quarter to September, with rents increasing by 3.2%. Demand here is also high – up 54% compared to the same period in 2019.
It’s not only the more affordable, higher quality properties that have been advantageous for northern areas. Housing supply has dropped in all areas of the north apart from the north-west where it has slightly grown. In contrast, demand in all of these areas has increased substantially.
It is likely that the two-speed market is here to stay for the foreseeable future.
Gráinne Gilmore, head of research at Zoopla, said: “The split in the rental market caused by Covid-19 has now crystallised and we are seeing the two-speed market firmly entrenched.
“For most of the UK, the demand/supply gap is underpinning moderate levels of rental growth. We haven’t seen the exodus of students from cities. And because more people are staying in the rental market, given the squeeze on mortgage lending, higher levels of demand will continue to underpin rents.
“The search for additional space, both indoor and outdoor, within the rental sector is also set to continue as the country goes through additional periods of lockdown.”
Property Investment Companies – Get in touch
Whether you’re an individual or a property investment company, we can help you move your investments to the north. To find out more about how we can help you grow your rental yields, contact North Property Group today.