Rents in Leeds, Birmingham, and Manchester are significantly outperforming other places in Britain, it has been revealed.
The trend is down to the exodus of young professionals out of London into these regional hubs, according to Landbay, the buy-to-let lender that published the research.
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Landbay found that, in the past year, rents have grown by 2.54 per cent in Leeds, 2.05 per cent in Birmingham, and 1.91 per cent in Manchester.
This compares to a rise of 0.97 per cent in rents across the country as a whole and a much slower rate of growth in London of 0.58 per cent during the same period.
London’s millennials leave due to living costs
Official figures show that the capital has seen a net loss of nearly half a million residents.
Landbay suggests this could be a result of millennials leaving the capital as they vote with their feet against the growing cost of living and renting in London.
John Goodall, Chief Executive of Landbay, said: “The truth is there is now a twin speed rental market as London’s rent growth is dwarfed by cities such as Leeds and Manchester.
“This is being fuelled by the capital’s millennial exodus as countless young professionals realise there is more to life than London. This same message carries weight with landlords, who are increasingly seeing the value of investing in these regional hubs.
“In many ways it could be argued that the ‘Northern Powerhouse’ is beginning to take effect amid stretched affordability and a harsher tax regime.”
Rents rise in regional hubs
The Landbay research found that rents in Britain rose 0.03 per cent in November, to an average of £1,212 a month. This is an increase of £10 since the beginning of the year.
However, if London is excluded, the typical monthly rent drops to £769, up from £761 since January this year.
The East Midlands, Yorkshire and the Humber, and the West Midlands have experienced the biggest growth in the past year, up 2.25 per cent, 1.5 per cent, and 1.48 per cent respectively.
Growth in the North East peaked at its highest point in two years in November last year, but has since dropped to 0.05 per cent on an annual basis – it’s lowest growth rate since August 2013.
While rental growth in London is comparatively low, the picture is beginning to improve. Rents are rising in 27 of the 33 London boroughs, which is a change from this time in 2017 when rents were falling in 26 of the capital’s boroughs.
And while every region in Britain has seen rents rising, the speed of growth has not been consistent. All areas other than London have experienced a slowdown.
Diversify to protect your property investment
Mr Goodall added: “It’s hard to escape the fact that we’ve seen a slowdown in the property market due to Brexit uncertainty and recent tax and regulatory changes for landlords.
“In that context, these growth figures show just how resilient property continues to be as an asset class. As with all investments, it is prudent to have a diversified portfolio – backed up in the case of buy-to-let by London’s recent fall and revival alongside strong performances from cities including Leeds and Manchester.
“London’s green shoots paint a positive picture for landlords ahead of what will likely be testing economic times with Brexit and further interest rate rises expected.”