"Maintaining profitability in whatever location, or during whichever trend we are currently operating in, is all about controlling the controllables."
There are many attractions attached to the bright lights of the big city life. Suburbia also appeals to many people and the lure of a more rural existence was certainly evident during the height of the pandemic.
Lifestyle choices can depend on many factors for both renters and owner occupiers. Age can play a part, as can budgets and changes in circumstance, i.e. starting a family or, at the other end of the scale, caring for elderly family members.
What I’m trying to say is that factors which might entice us at one time in our lives, might not always hold their allure. Over the past few years, we’ve also experienced how influencing factors which are way beyond our control can fundamentally impact what we want and need from our homes. And these trends are not always the easiest for landlords to follow, especially for those who may have focused on certain property types or locations when building their portfolios.
According to recent data from Rightmove, low levels of suitable property, soaring rents, and wider financial pressure caused by increased living costs are fuelling an exodus of renters from cities across Great Britain.
Market analysis covering ten major cities found that a growing proportion of renters are fleeing city life to find a cheaper place to live or to get more for their money. 42% of renters are now looking to move out of the city they currently live in while the remaining 58% are looking to stay in the city. This represents an increase on the 37% who were looking to up sticks from their city lives last year and a significant rise from the reported pre-pandemic figure of 28% in February 2020.
Rents rising at a record pace over the past few years and a decline in the number of available properties for renters to move into are likely reasons that a greater proportion of renters are looking outside of the city to secure a home. Average asking rents across Great Britain are suggested to be up 11% compared with this time last year, and up 12% across ten major city centres on average.
Edinburgh city centre saw the largest increase in average asking rents compared with last year (+19%), followed by Inner London (+18%) and Manchester city centre (+14%). Another contributing factor to leaving a city is that demand from renters to secure each available rental property has rapidly increased. Competition to secure a home to rent in a city centre has more than doubled compared with three years ago (+125%).
The motivations of tenants are something that landlords can’t control but maintaining profitability in whatever location, or during whichever trend we are currently operating in, is all about controlling the controllables. Costs always come with property investment and in maintaining properties to a good standard. Raising money for such maintenance or improvements has certainly sharpened the focus of many landlords in recent times due to rising mortgage rates and affordability calculations. This increased outlay is also pilling additional pressure on rents and yields for differing property types and locations. It will be interesting to chart how these rental increases impact any behavioural patterns from tenants moving forward, and the subsequent reaction from landlords in meeting their ever-shifting demands.
