Areas in UK where Rental Values will Increase in 2023
Rates rise when there is an increase in demand, and demand grows when there is lack of supply. As all professionals in the property market will agree, including the letting agents in Witney, this is the basic reason for the soar in the UK rental market. With the current economic crisis, unaffordability to buy a house, especially for single income and lower income earners, has led to an increase in the demand for more properties to rent. That is why the rental market in 2023 looks profitable at the present time.
However, where in the UK will we see the highest rental values in 2023? The areas with the highest demand, of course. However, the demand can be based on various factors.
Tenant demand:
The student population constitutes a large percentage of the rental market. Hence, areas near good schools and universities are sure to be in demand. Some of the top university cities are London, Manchester, Birmingham, Oxford, Nottingham, Leeds, Edinburgh, Glasgow, Coventry, Newcastle upon Tyne, Sheffield and Bristol.
Career opportunities:
Regeneration in a number of towns and cities has led to more employment being available
This acts as an incentive for job hunters which, in turn, leads to a demand for rentals. Some such are:
• Slough and Reading which are undergoing development. They offer good transport facilities and since they are still upcoming areas, their prices favour comparably with the more expensive areas.
• Bracknell is another town outside London with advanced ICT, engineering and technology opportunities.
• Liverpool and Peterborough, though opposite in direction (east and west) are both popular on the property list because of their industrial growth and residential facilities. In addition, both are university cities as well.
• Bolton in Greater Manchester is another such hotspot location with its wide range of industries.
• York continues to evolve with a range of culture and communities making it easier for people to choose a suitable neighbourhood.
Property prices:
With the influx of a majority of the population to employment in the cities, the demand for rental accommodation in those areas has increased tremendously.
Although London remains the city with the highest demand for rentals, the inhibitive cost of property there may lead to a slight downfall in the demand. However, even with a minimal decrease in demand, central London and even the outer London areas, especially north west and east London, still remain popular on the rental market. The increased mortgage rates have made it impossible for some first-time buyers to access property. This, in turn, has increased the rental demand. With unaffordability being a major problem, some tenants have decided to remain where they are to avoid any rent increases while others are downsizing to smaller, affordable accommodation. One and two bedroom apartments have risen in demand.
Rental yields:
A look at places which offer high rental yields is another way of identifying where rental values will increase. Locations close to city centres and those which have been regenerated or are undergoing massive development will offer higher yields. Those areas with good transport facilities and day-to-day amenities such as shopping, restaurants, educational, medical facilities and entertainment venues will also add to the yields.
Supply versus Demand:
Although the affordability of renting properties to suit consumer choice has dwindled, it has only led to an increase of rental enquiries for more affordable properties. As one authority stated on the imbalance of demand against supply, “The gap in the supply of rental properties is making properties more desirable, creating a pronounced demand in the market.” A considerable portion of an individual’s earnings is going towards rent, so the areas with high employment opportunities would necessarily provide good rentals as well.
Population growth:
One way of judging locations with increased rental values is to look at the population growth. Areas with a large or increasing number of inhabitants will probably result in a hike in demand for accommodation as well.
Professionalism in the rental sector:
While considering investing in Buy-to-Let property, a few factors need to be considered. The proposed Renters Reform Bill and the EPC regulations are two such. If the standards of the building regulations with regard to energy efficiency are met by keeping operational costs down, those energy efficient properties will be an incentive to tenants as they offer stability and lower functional costs as well. Locations with such properties, such as new builds, will yield higher rentals.
Conclusion:
Though it seems predictable that rental values will increase in the coming year, the most likely areas for such increases can be based on the above factors. Further research on location issues that are on the priority list of investors needs to be conducted, so that the most productive locations can be chosen for investment.
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