The surging appetite for larger homes, preferably houses, and more access to outdoor space amid the pandemic is fueling demand in the U.K. rental market.
Single-family houses rented 30% faster in the final quarter of 2020 compared with the same period in 2019, according to a quarterly report from U.K. listing portal Zoopla on Tuesday. By comparison, landlords have seen no such boost to flats, which rented only 2% faster during that time frame.
“The search for space among renters is coming across loud and clear from the data, with houses in major cities now being rented out more quickly than a year ago,” said Gráinne Gilmore, head of research at Zoopla. “In more cases flats are now taking longer to rent out.
The divergence between demand for apartments and houses was most apparent in London, where houses are renting 14% faster than a year ago while flats languished on the market for 19% longer than at the end of 2019, according to the report.
Landlords of houses in Manchester, Edinburgh and Leeds have also benefited from the flight to larger properties. In all of those cities, houses are renting significantly faster than a year ago. In Manchester, it’s now faster to find tenants for a house than a flat, a reversal from pre-Covid-19 times.
Meanwhile, as seen in the sales market, the trend toward less dense, more affordable areas with better access to parks and outdoor space is also driving suburban rental markets.
Birmingham, Manchester, Leeds and Edinburgh all saw average rents fall or flatline in their inner cities, while rentals in their outer suburbs saw more robust price increases, as commute-time became less important to many tenants. In Edinburgh for instance, the average rent in the center city fell nearly 2% while the outer regions saw almost a 4% rise in average rents, according to Zoopla.
Ms. Grainne referred to the trend as a “halo effect” benefiting the outskirts of major U.K. cities.
“Changing working, commuting and tourism patterns were felt very quickly in the central London rental market,” she said. “Now we are seeing the impact in other city centers, although on a more modest scale.”
Demand for rentals everywhere but London, for instance, was up 21% in January compared with a year ago, according to Zoopla.
By contrast, the listing portal recorded a 10% fall in rental demand in the capital. Though some agencies have seen steep discounts draw opportunistic renters into prime central neighborhoods like Chelsea and Canary Wharf, according to a report this week from brokerage Knight Frank.
Richard Davies, head of lettings at estate agency Chestertons, said a huge increase in rental supply is also encouraging tenants to move. The agency recorded a 30% increase in prospective tenants so far in 2021 compared to the same period a year ago.
“Although some welcome the future of returning to an office from a social perspective, their work could be reduced to two or three days in the office as opposed to five days a week,” he said. “This means more tenants are flexible with regards to location and their commute.”