Tenants seem to be returning to some of the UK’s most sought-after cities to take advantage of lower rents that are available because of lockdown. We take a look at what this means if you’re looking to benefit from lower rent.
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Is there a demand for rental properties?
The Covid-19 pandemic and the restrictions put in place to slow its spread affected work, school, leisure and travel. This saw many people, especially the young, move out of rented accommodation and back home to live with their families.
According to research from the property giant Zoopla, rent in the larger cities dropped significantly, with London having the largest drop at 9.4%. Other major cities like Edinburgh saw a 3.2% drop. The drops resulted from tenants looking for cheaper rentals outside the big cities, which lowered demand.
As demand for rentals in places outside major cities increased, so did the rent. That is why Zoopla’s March 2021 report indicated an increase in rent in places outside London. In fact, the report indicated that the average cost of renting a home in the UK outside London rose by 3% in the first three months of 2021 to stand at £780 per month.
Will rent go up in 2021?
Due to economic uncertainty, it’s not easy to say for sure. However, it might be important to note a few things.
Zoopla’s research indicates that demand for rental property has started to rise. However, the majority of tenants are looking for homes with private outdoor space. Top searches for rental properties include terms like balconies, gardens, pets, parking and garages. This reflects the need for freedom to cope with Covid-related restrictions.
While the market as a whole is moving quickly, the market for rented houses is moving quicker than that for rented flats. This means that the supply of rented houses is lower than the demand. That’s why rent is continuing to increase.
The economy is also opening up gradually, and things are steadily returning to normal. Demand for rentals can be expected to rise significantly, but this is dependent on whether the economy will continue to open up in line with the planned timetable. If demand increases, rent might also rise.
Let’s not forget that the government is also trying to help first-time homebuyers get on the property ladder. You might have heard or read about schemes like the ‘Help to Buy: Equity Loan scheme and the mortgage guarantee scheme. These initiatives could impact the demand for rental property.
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Will rent prices drop in London in 2021?
Though London is still a comparatively expensive place to rent, it could be wise to take advantage of the lower rents currently on offer.
Zoopla’s head of research, Gráinne Gilmore, states that rent has started to rise as renters seize on the lower rents available. Demand and rent may likely continue to rise in city centres as offices and amenities start to reopen.
Final word
Where you choose to rent is dependent on your unique circumstances. There’s no doubt that the pandemic has caused a unique set of circumstances that may present opportunities for those looking to rent in large cities.
That said, the signs are that these circumstances will be temporary. Those looking to take advantage of lower rent in the UK’s cities may need to act quickly.
