The UK’s Private Rented Sector (PRS) is going from strength to strength – growing house prices and a chronic undersupply of homes are forcing a large proportion of the British population away from homeownership and into renting. This is particularly the case in larger cities such as London, Manchester and, as of recently Leeds, all of which have burgeoning economies and a vast array of job opportunities.
Whilst the Leeds city region, in the Yorkshire and the Humber area, has always formed the strongest and largest regional economy (particularly in terms of its financial and business industries), it is now that the city is coming onto the radar of savvy investors looking to diversify their portfolios. And rightly so: thanks to a large number of companies settling down in the city, Leeds has become a major focus for regional and employment opportunities, attracting thousands of people every year to live there.
With an increasing amount of people flocking to the city, the demand for housing is higher than ever before. In particular, it is the young professionals moving into the city for their career who are looking for central apartments and small to medium sized houses – unfortunately the two most under-supplied forms of housing within the city.
According to JLL, Leeds is predicted to need an additional 20,000 new homes to meet demand over the next five years. Whilst the rental market has been becoming increasingly active over the past few years, rents have only increased by a moderate 2.5% pa on average. Nevertheless, as demand has now surpassed the supply of rented accommodation, rental prices have exploded by an impressive 7.7% during 2014.
Rents for a typical 2 bedroom apartment in the city centre nowadays lie around £825 pcm (£600 pcm for 1 bedroom flats). These types of housing are highly sought-after in Leeds, leading to virtually almost no apartment suffering from void periods and city centre occupancy rates being in excess of 98%.
According to various sources, 2015 is set to be highly successful for the residential market in Leeds, with rental growth to reach an impressive 5% over the course of the year. As more and more developers and investors alike recognise Leeds as the superb investment opportunity that it is, supply as well as demand of high quality rental accommodation will increase, causing a rapid and continuous growth period for rental prices over the next few years.