A new study has found that rising rents, increased living costs and a lack of available properties have led to a significant proportion of renters leaving urban areas in search of more affordable options. The study, which is likely to be of interest to all UK property investors, reveals that the exodus from the cities has increased year on year since 2020. In fact, 42 per cent of renters are currently looking to move out of the city; this figure is up from 37 per cent a year ago and 28 per cent in February 2020 in the pre-pandemic era.
The research looking at data across ten major UK cities (shown in Table 1), highlights this trend. For instance, in Birmingham, 38 per cent of renters were looking to leave the city in 2020; this increased to 45 per cent in 2022 and now sits at 49 per cent in 2023. Manchester, which currently has the highest number of tenants thinking about leaving the city centres experienced a similar pattern, with 39 per cent of renters looking to leave the city in search of cheaper rents in 2020, 49 per cent in 2022 and 54 per cent in 2023.
Table 1: In and Out of the City Trends
Average asking rents in city centres have risen by 12 per cent compared to last year, while demand for each available rental property has more than doubled (increasing by 125%) since February 2020. Table 2 showcases city centre trends in average asking rents, with Edinburgh experiencing the largest increase compared to last year at 19 per cent, followed by Inner London at 18 per cent and Manchester City Centre at 14 per cent.
Table 2: City Centre Trends
According to the research, renters are widening their search radius as financial uncertainty and the rising cost of living take their toll. The largest increase in renters looking outside the city has been observed in London, followed by Sheffield and Manchester.
As renters adapt to the changing property market, their search behaviour is evolving too. The average area considered by renters has nearly doubled since February 2020 to 122km², reflecting the broader range of locations being explored. Additionally, 35 per cent of renters across Great Britain now end their search with a cheaper property than they initially contacted an agent about – this is up from 31 per cent three years ago.
Tim Bannister, property expert at Rightmove, which conducted the research, commented: “The latest rental market trends demonstrate how cost pressures and the imbalance between supply and demand are changing the way tenants search for their next home.”
Sarah Bush, Head of Lettings at Cheffins, commented: “The lack of available properties has forced up prices and this is coupled with demand from job movers or those who are only coming to the city for a short amount of time for employment reasons. These are the tenants who are now having to compromise with a village or rural location. Similarly, families who need to rent properties with three or four bedrooms often have to turn to village properties to simply get the space they need at an affordable level.”
Despite the challenges faced by property investors and renters alike, there are some positive signs in the market. Tenant demand for each available rental property across Great Britain has dropped by 4 per cent compared to last year, and the number of available properties for rent has increased by 8 per cent. This suggests that competition between tenants is easing slightly from the record levels seen in previous years.
