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What long term effect has Covid-19 had on the UK rental market?

by Nikki Dale -

There have been many Covid-19 analysis papers written examining who and how the pandemic has affected, industries, financial sectors, as well as individuals’ social situations, for e.g., employed or Self-Employed.

In one paper the logic is households renting in the UK tend to be lower income, younger and working in sectors – such as retail, hospitality, or the arts – that have been disproportionally negatively affected by the pandemic.  Also, it’s found renters are more likely to be self-employed, so get less personal income support.  This subsequently has had an adverse effect on rents in affected areas.  A reported concern was the fall in rents in city centres and in Greater London, where rents fell strongly during 2020, according to Zoopla, by 8.3%.

That said, Zoopla in a Q1 2021 report, suggests that houses during 2020 have been let 30% quicker than previously, and rental growth outperformed in the outer areas of cities compared to more central locations.

A good example from Zoopla is in central Birmingham, rents have been falling by 3.4% year-on-year, whereas in the surrounding boroughs of Bromsgrove, Sandwell and Wolverhampton rents have actually risen by an average of 5%. More generally, well-connected (outer) towns have observed strong rental growth, with increases, year-on-year, for example, Rochdale of 8.2% or Hastings of 8% and declines in rents in cities like Edinburgh (-1.8%) or Greater Manchester (-0.9%).

Are renters searching “green” the same as home-occupiers?

It would seem so, and it is far easier and quicker for renters to make this shift – subject to availability of course.  Many industry experts have seen or anticipate a change in the types of properties that tenants will want to rent.  Previously, the interest was in or close to buzzy urban centres, however, letting agents will likely continue to see an increased interest in households opting for greener spaces.

Like the home-occupier market, there has been a frequent claim that the pandemic brought about a rise in demand for garden space, however, from data analysed in the CEP Covid-19 Analysis (March 2021) the trend towards detached houses with more garden space actually pre-dates the onset of COVID-19 by a number of years.  Particularly the trend towards purchases of detached houses with larger gardens has been going on since at least 2012.

A +4-year high on rental growth outside of London  

Rents are increasing at their fastest for four and a half years it was reported in May this year, particularly in the north east and south west.   Rents are rising understandably due to high levels of demand, and now a shortage of homes to rent.

The average cost of renting a home in the UK outside London rose by 3% year-on-year in the first three months of 2021 – at £780 per month.

The high levels of demand from tenants, combined with a shortage of rental homes, meant the average property took just 16 days to let, according to Zoopla’s latest Rental Market Report.

It was also reported, at a city level, those in the north where renting remains more affordable, saw the biggest rent increases.

Newcastle led the way with average rents rising by 5% year-on-year, followed by Sheffield at 4.7%, Glasgow and Liverpool both at 4.1%, and Belfast at 3.8%.

The average cost of renting a home in all of the top five cities that saw the biggest increases was £665 a month or less.

Renters are returning to city centres as lockdown restriction ease

Where there are high rental-demand areas that have seen a rise since 2020, other areas experienced a pandemic-led drop-off in 2020.  However, a year on since the housing market reopened and as offices start to reopen and rental affordability improves, rental-home demand is starting to bounce back in city centres according to Zoopla.

Gráinne Gilmore, head of research at Zoopla, said: “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.”

Rental Market trends here to stay?

Virtual Landlording & Evaluations

A sped-up trend, that is not a negative effect of the pandemic, appears to be the quickened shift to remote valuations.  While Covid-19 safety measures have made this a must-solution, it’s been realised they’re not only safer, but quicker, easier and greener and not to mention far more affordable when it comes to ensuring properties are insured for the correct amount.

Remote Inspections

Another shift that is arguably here to stay and be fully adopted by landlords going forward is inspections being carried out remotely.  Experts are urging that landlords continue to keep detailed and dated records of the inspections carried out.

Melissa Choules, Senior Claims at Hamilton Fraser said: “ Based on claims that have been reported, it seems tenants and landlords have been cooperating and communicating with each other regarding any issues that have arisen at the property that may require repairs.”

Key takeaways

  • While rents in city centres and London fell significantly in 2020, and recovery will likely be slow, tenants are on the hunt for rental bargains, as the initial signs of a bounce back in city centres.
  • Like owner-occupier demand, the requirement for greener spaces continue to rise and cause a house rental shortage in certain areas of the UK.
  • Virtual and remote landlording has been welcomed and adopted by both parties. Massively time-saving for the landlords and convenient for the tenant, as all sorts of rental-related matters can be arranged for them from anywhere.


SOURCE: Blundell et al. 2020 | 2021 | CEP Covid-19 Analysis (March 2021)


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