North West Reigns Supreme in UK Annual Rental Growth Statistics
For many landlords, rental growth has been the unparalleled highlight of the 2023 UK buy-to-let landscape. With supply and demand imbalance looming over the property sector and more people clamouring for privately rented accommodation, rents have surged while property prices have declined.
A property investor’s dream, right?
However, buyers need to be diligent. They cannot just throw money at a property in any location and expect huge gross rental yields.
Buy-to-let investors must ensure they choose an area with the most substantial rental yields to achieve the best ROI possible.
According to the latest Goodlord Rental Index, England’s top rental growth area is the North West.
Let’s break down those rental growth figures.
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Best Rental Growth in the UK 2023
The Goodlord Rental Index shows a substantial 7.3% year-on-year rental growth in England during November. As a result, the average rent sits at £1,666 PCM.
Those statistics show the most significant rental growth percentage in the North West, rising 11% compared to last year.
Other notable rental growth regions include the East Midlands, North East, South West, South East and West Midlands – though no other region comes close to the North West, where cities like Liverpool and Manchester continue to attract tenants willing to pay premium rents.
Goodlord chief executive William Reeve said: “Whilst month-on-month patterns continue to follow the predicted seasonal ebbs and flows, the year-on-year data highlights how much the market has changed over the last 12 months.
“Rents are up by over 7% compared to November 2022, reflecting the intensity of demand the market has experienced since then.”
The winter period is one of the slower seasons for lettings. However, market demand is undeniably intense, enough to keep rents steady compared to October figures. Learn more about choosing the best place to invest in property in the UK with our free resource.
However, on a month-by-month basis, rental costs fell by 2% from October to November. In previous years, the drop in average price between these two months has often been more severe.
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How Do Rental Figures Look Alongside the Other UK Housing Market Stats?
If high rental growth is not enough to tempt buy-to-let investors into the market, then the significant asking price discounts may sweeten the deal.
Research from Rightmove and Zoopla shows significant discounts from sellers looking to compete for buyers’ attention. While buyer activity remains low in the UK, sellers have been forced to drop their prices by as much as £18,000 (Zoopla), the most significant discount in five years.
In addition, property price growth remains subdued as buyers continue to recover from a cost-of-living crisis that saw inflation escalate and interest rates rise to stem the tide. The Bank of England’s measures have helped cut inflation by half, and wages are growing faster now, putting more money in buyers’ pockets. In addition, mortgage rates finally came down below 5% in the latter stages of 2023. Historically, if the mortgage lenders are willing to trust in the market, the buyers will soon follow. 2023 has seen a surge in interest in buy to let houses for sale and this is set to increase in 2024, with more people looking to create additional incomes.
Therefore, buyers are more likely to find below-market-value properties and enjoy the benefits of high rental growth, mainly if they are mortgage-free buyers. We have created a guide describing what buying a rental property entails as well as some information on the latest buy to let Manchester has to offer.
However, Nationwide’s November House Price Index showed that property prices grew 0.2% between October and November. This is the third time in 2023 that house values increased month-on-month, indicating that the market is regaining some good form. While property prices will remain low well into 2024, the market should continue to recover, suggesting cheaper properties may not be available for much longer. Read more with our guide to Property Investment in the UK.
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Why Invest in the North West?
So, the North West has high rental growth per the Goodlord Rental Index, but why else would somebody consider an investment property in the region?
Chiefly, property is as cheap as chips in this part of the UK.
Even in a major city like Liverpool, the average property price is only £179,129, whereas the average UK price is £292,882.
In addition, Savills has forecast 20.2% capital growth in the North West over the next five years, which is well about the UK average and one of the best growth predictions in the UK.
These factors, coupled with significant rental growth over the last year – and another 6% national rental growth over 2024 – ensure the North West remains a viable option for buy-to-let property investment.