Rising UK house prices make buying more difficult
Of course, renting isn’t always a choice, and a lot of those renting in the UK are people who can’t afford to buy property due to high housing costs. While rising house prices seen throughout the UK are good news for those who hope to make gains through capital growth that makes their home worth more over time, people with lower incomes are struggling to save a large enough deposit to purchase a home of their own.
One of the main groups affected by this monumental shift towards rental properties is millennials. This group are often living in city centres, where property prices are highest, and buying where they want to live isn’t an option. This is especially true in areas like London, where housing costs come to a whopping £484,173 on average and so residents have no option other than to rent a London property. Even with more people needing to rent in London, however, London rental prices trends show a – 1.12 per cent decline in rental cost growth in London. This, paired with the low average rental yields London offers, is why so many investors are looking elsewhere for their investments, focusing on things like rental demand by area, high yields, and capital growth potential.
With massive student debts and rental bills that are often more than half of their salary, saving for deposits on houses and flats isn’t an option in the current market. These young professionals are looking for properties to rent in the form of high-quality rental accommodation in convenient city-centre locations, and new developments and regeneration projects are providing an answer for this. Developments like One Baltic Square, for example, which is located in the thriving Baltic Triangle area of Liverpool, offer fantastic rental accommodation with a luxury edge which is perfect for young professional residents.
What does this UK rental market rise mean for buy to let investments?
So we know that the UK is experiencing a rise in the number of people seeking properties to rent, but what exactly does this mean for the UK property investment market?
For potential investors, buy to let property is a lucrative asset. Due to more demand from renters, there’s been a significant average rent increase per year for UK properties. This is more prevalent in areas with high-performing property markets like Liverpool and Manchester. The UK rental market for 2019 highlighted these two cities for their rental price growth, high rental yields, and strong capital appreciation. Due to experiencing some of the highest rental demand the UK has seen, Liverpool rental costs have grown by around 2.65 per cent, while Manchester has seen a 5.76 per cent increase. Investors who purchase a buy to let property in these North West cities can expect to receive an average monthly rent of £776 in Liverpool and £1,148 in Manchester. While rent in Manchester and Liverpool is increasing, other Northern cities are also on the rise. Rent in Leeds, for instance, has increased by 2.47 per cent, causing a buzz within many property news outlets who recommend the area’s potential.
This rental growth in the UK is encouraging more and more people to make a buy to let investment. With opportunities like the Liverpool student investment, City Point, investors can purchase an apartment from as little as £59,995 and benefit from 8 per cent net rental returns due to high demand from students in the city.
UK rental market trends predict even further growth over the coming years. Research by The Charted Industry Surveyors has found that by 2023, rental values in the UK will have risen by 15 per cent. If you’re interested in joining the UK’s buy to let investment market, the time to do so is now, as prices in the UK housing market are also set to see an increase. Take a look at our properties page to search for property opportunities in the North of England and get in touch if you’re ready to begin your investor journey.