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Rents soar outside London, but fall in the capital

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Northern cities have seen strong rental growth and demand is expected to increase further as we return to office working, while the cost of rental in London is down almost 10% in a year
Rental growth outside London has hit a four and a half-year high, according to Zoopla.

The property portal said that rents are rising fastest in the North East and the South West amid high levels of tenant demand and a shortage of homes to rent.

The average cost of renting a home in the UK outside London rose by 3% year-on-year to stand at £780 per month. And the average property took just 16 days to let.

Capital losses

In London rents are falling, down 9.4% compared with a year earlier. Average monthly rents are now at the same level they were in December 2013 – £1,554 a month.

But the rate at which rents in the capital are dropping is easing, as tenant demand rises due to a combination of offices and amenities reopening and dramatically increased affordability.

Affordable rental markets

The North East saw the strongest increase, with rents 5.5% higher in the first three months of the year than they had been a year earlier.

But it’s also one of the most affordable rental markets in the UK with an average monthly rent of £559. Rents in the region typically account for 22% of tenants’ income, compared with a UK average of 32%.

Rents increased by 5.3% in the south west year-on-year, while they are 4.8% higher in the East Midlands and 3.8% higher in Wales.

Gráinne Gilmore, head of research at Zoopla, said: “The opening up of the economy and the slow return to ‘business as usual’ as the vaccine rolls out means demand will continue to build over the summer as more people move to rent their first property. Although, as ever, this will be dependent on the economy opening up in line with the planned timetable.

“Demand will continue to rise in city centres as offices start to reopen and this, coupled with increased affordability levels in many cases, will start to counter the negative pressure on rents seen over the last 12 months.

“In London, where rents are down 9.4% on the year, a modest reversal in rental declines has begun, but it will be a slow build back to pre-pandemic levels in inner London. The recovery will be uneven and we expect new or recently refurbished properties to attract higher levels of demand in the second half of the year.”

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