The rental price increases across the UK have been better outside London than in the capital.
The rise of the regional private rented sector is continuing in the UK, with investors in buy-to-let properties outside of London, and the north in particular, able to ask for higher rental price increases than their London counterparts, helping improve income levels.
For years, London has been seen as something of a safe haven for property investors, thanks to its evergreen nature and the high prices that owners of rental properties can demand. But over the last year, this has changed again, and now it is those in the north of England who are able to see their profits rise most.
According to the latest release by Rightmove, over the course of 2016, the average rental asking price in the UK climbed by three per cent, pushed forth by Yorkshire and the Humber with a rental asking price rise of 4.5 per cent, and the north-west, where prices were up by 4.4 per cent.
Other areas that performed well included the east of England and Scotland as a whole, but overall, all regions except one have seen rises in what owners are asking tenants to pay this year as demand and confidence in the market continues to climb.
The only region to have experienced a fall, surprisingly, was London, where the average asking price for rental homes fell by as much as 4.4 per cent, showing that while the rest of the sector has continued to display strength in a time of uncertainty, the capital is perhaps not quite as strong as it has been in recent times.
Rise of the commuter belt
Areas outside of London – especially in the commuter belt – continued to perform well in 2016, with areas such as Rainham, Bexleyheath, Erith, Hornchurch, Sidcup and Luton all posting strong rental growth.
Developers have flocked to commuter belt areas with good transport links into London, as they present good investment opportunities. This completed development by Experience Invest is an example of how investors are benefiting from the rising demand for properties in locations just outside of the capital.
In terms of real rental growth, the regions have also experienced a rise over the past year when London is disregarded. Many would have expected that in the last 12 months, the cost of renting a home may have dropped against a backdrop of politics that we have experienced.
However, in reality, the Office for National Statistics reports, rental prices for England and Wales, without London included, were up by 2.3 per cent on average throughout 2016, showing the underlying strength in rental property, and how it continued to grow throughout the challenging times it has faced.
Rents set to climb in 2017
Looking to the year ahead, Rightmove said the conditions that have seen asking prices increase in 2016 should continue into this year. And despite the market being likely to face even more hurdles, the company said that it expects to see prices continue to climb, even if not as quickly as in recent years. Investors can expect to increase their asking prices by as much as four per cent in 2017, it said.
With upcoming tax relief changes and pending Brexit negations, property consultancy Experience Invest expects UK-based investors to approach buy-to-let investments with caution. Experience Invest suggests that overseas investors will be keen to take advantage of the favourable exchange rates currently available, which will in turn help boost confidence in the market.