Northern cities outperform South on rental growth

Rental growth in the North has remained steady, despite a slump in the South according to research from Countrywide.

Five of the cities that have seen the cost of rent rise fastest are all in northern England or Scotland. Meanwhile, cities in the South have seen rental growth slow over the course of 2016.

Manchester has seen the highest growth, with rents of new lets rising 7.1% over the last year, faster than anywhere else in the country and more than three times faster than the average.

York, Leeds, Liverpool and Glasgow make up the rest of the top five – all have seen the rate of rental growth pick up over the last three months.

Most southern cities have seen rental growth slow over the course of 2016. Seven of the 10 cities where rents are growing most slowly are in southern England. Oxford, Cambridge and London have seen the largest slowdown in growth and all drop at least five places from last year.

Greater price sensitivity has caused rental growth to slow across the South. The proportion of landlords cutting the asking rent has doubled over the last 12 months in cities in Southern England.

Johnny Morris, research director at Countrywide, said: “A different type of two speed rental market is emerging, with falling stock and growing demand driving rental growth in many Northern cities at a higher rate than those in the South.

“With London rents growing at the slowest rate since the downturn and northern cities recording rent rises three times as large as their Southern counterparts, there are signs that the North-South rental divide is starting to close. Although at current rates it would take at least five years for the gap between rents in the South and North to close back to 2010 levels.

“As some would-be buyers and sellers sit on their hands, Brexit-induced uncertainty has continued to boost to the rental market. Overall this is yet to stoke rental inflation, but September saw record activity, with increasing numbers of lets agreed and tenants choosing to renew their contracts. On current trends, 2017 could be the first time since the 1930s that more homes are let than sold.”

The slowing of rental growth has been attributed to increased competition among landlords, following a spike in the number of homes available to rent following April’s stamp duty changes.