London Rent Falls May Push Landlords Further North

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As London Rental Yields Fall, Investors May Want to Consider Northern Properties

It is no secret that the average London rent is considerably more expensive than in the rest of the United Kingdom. While London offers a premium type of living, it comes at a cost, with property prices and rents much higher than anywhere else in the country.

While those substantial rental figures may entice some landlords into investing in the capital, the costs of buy-to-let are enough to force those investors further afield in search of better value investment opportunities.

New research from Chestertons shows that those premium rents in London may not be easily attainable, which could negatively impact gross rental yields in the capital.

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What Does the Rental Market Look Like in London?

Chestertons’ data shows a significant 125% uptick in landlords opting to lower their rental rates in February due to changing market dynamics in the capital.

The numbers indicate that the London rental market has nearly 40% more available properties than the previous year, coupled with a decrease in the number of tenants actively seeking to relocate. This dual effect compels landlords to decrease their rental prices to attract tenants and prevent prolonged vacant periods, which can be financially burdensome.

Head of Lettings at Chesterons, Adam Jennings, says: “February didn’t see the volume of new tenants entering the market that many landlords had expected. At the same time, the number of available rental properties continued to rise which has left landlords little option but to start reviewing their prices.

“Landlords that have become accustomed to continually rising rents since Covid and aren’t willing to adjust to the current market conditions are increasingly finding themselves with empty properties, a situation which was very rare last year.”

Find Out More: If you are considering purchasing a buy-to-let apartment, dive into our guides on UK property investment and UK off-plan property.

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Where Can Investors Find Rental Markets With Highest Growth Potential?

As well as suffering from declining rents, London holds the title for the English region with the lowest rental growth percentage over the last year.

According to Zoopla, London rents increased by 6.4% from December 2022 to December 2023. At the time, this put the average monthly rent at £2,119. However, the average rental yield in the capital sat at 4.92% during the same period – this was lower than any other region in the UK.

However, investors may want to look further north for more forgiving –and potentially lucrative – rental markets.

For example, the North West saw an annual rental growth of 10.2% (December to December) and boasted an average rental yield of 6.52%. In addition, North West areas like Burnley, Liverpool, and Blackburn are also featured in Zoopla’s rundown of the ten best cities for gross rental yields. We have a useful stamp duty calculator for our readers to use to assist in their calculations.

Investors may also be drawn to these areas due to their convenient property prices. For instance, Zoopla puts the average buy-to-let price for Liverpool properties at £128,905. In comparison, the average buy-to-let price in London is £518,056.

Interested in more regional buy-to-let insights? Consider reading our property investment area guides, including:

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Author

Dale Barham

Dale is a property content writer at RWinvest. Keeping a close eye on the UK property market, Dale helps our readers stay informed and up to date on the latest market news and statistics.