Ongoing cost-of-living crisis is causing renters to make tough decisions
The ongoing cost-of-living crisis is continuing to put pressure on people’s budgets, with many choosing to take a deeper look at where they can cut costs.
With average rents in Greater London now at £2,141, an increasing numbers of tenants are looking for properties outside the capital where rents are more affordable and everyday living costs are lower, according to Hamptons.
However, not all experts believe that London will see as great of a decline in rental demand as expected.
Rental shift – adjusted working patterns
Andrew Ward (pictured left), managing director at Solomon Investment Partners, said the hybrid working model has enabled more employees to work from home, sometimes only going into the office a couple of times a week.
“As a result, many renters with jobs in London are looking to cut their costs by moving into the commuter belt; counties such as Berkshire, Hertfordshire and Essex, where travelling to London within an hour is still feasible,” he said.
Ward added that, according to Autonomy, a British-based research organisation, 61 British companies trialled a four-day week. By its end, 92% of them had decided to stick with it, based on its positive impact on productivity, reduced sick-leave and improved employee morale.
He believes that a wider shift in that direction could further support the trend for renters to swap the city for open green spaces.
Rental shift - moving further afield
“From our own experience and other companies’ research, we know that some tenants have been leaving London to move even further afield; to the Midlands and the North of England,” Ward said.
Here, he added, many towns and cities are considerably more affordable, but are still vibrant places, with great job prospects, thriving city-centres, reliable transport links and significant investment in regeneration.
He has also seen more university graduates choosing to start their careers somewhere other than London.
“London’s high rental costs and prohibitive prices for first-time buyers have made many of the UK’s other city region economies decidedly more attractive prospects,” Ward said.
Rental shift – looking ahead
Ward said these trends are creating important opportunities for buy-to-let investors looking for lower property prices, better yields and greater capital growth potential in fast-regenerating areas outside London.
“At Solomon Investment Partners, we are seeing growing interest in regions such as Merseyside and Greater Manchester,” he said.
Ward added that Liverpool is a great example, with it benefitting from massive inward investment and infrastructure spending, as well as from the growth of high-value, knowledge-based industries.
“Like many other British cities, it offers better affordability and solid career prospects, and that is likely to make it increasingly attractive to both tenants and investors in the coming years,” he said.
Jeff Knight (pictured right), director of Grey Matter Marketing Solutions, said while current conditions have certainly led to a number of changes in where people choose to live, he believes the appeal of London will remain going forward.
Contrary to Ward, Knight said graduates fresh from university will be wanting to find rental properties in cities like London for the job opportunities and social life.
Knight said if renters’ move away from London is price driven, then he expects to see market forces of supply and demand solve that challenge.
“If prices are too high, landlords will not want an empty property so prices will reduce, putting the strain on the landlord and potentially the lender too,” he said.
Knight said he expects London will remain an attractive place for people to live, rent or own, in the future.
“We will just have to ride out any market adjustments from the changes in recent years; to help, we need to see quality data and market insights so brokers and lenders alike can make proper strategic decisions,” he added.
Do you believe renters will look to move away from London as they continue to feel the financial strain of current conditions? Let us know in the comments below.
