A recent study by Hamptons International has found that the South of England continues to see an upward pressure on rents - despite it already being the most expensive part of the country. In their study, Hamptons International found that the rental divide between the North and South has grown by 11% since 2014 and has increased for the third year in a row.
While this is encouraging news for landlords in Southern regions, it is less welcome news for tenants who are spending a large chunk of their income on rent. According to recent data from Benham & Reeves, tenants in the South are spending as much as 74% of their monthly income on rent, compared to just 35% in the North. With the above in mind, it’s easy to see why tenants living in the South are now looking to go further North to get more for their money. According to data published by Rightmove in late 2019, it was revealed that some 42% of Londoners were planning on relocating outside of the capital within the next 12 months and cities in the North have seen their population increase significantly in recent years.
Northern cities like Manchester, Leeds and Liverpool are all flourishing and are starting to offer opportunities for young professionals that can rival their southern counterparts. Thanks to the Northern Powerhouse initiative, cities in the North have seen a huge amount of regeneration and investment and now, the region has made a name for itself in various sectors. A classic example of this is Greater Manchester and its expertise in the digital and tech sector. The sector now contributes around £4.1bn to the region’s economy and in 2019, it was named as the best digital hub outside of London by the Tech and Digital networking site, Tech Nation. When you consider this and the fact that rents across Northern regions are still around 25% lower than the national average, it should seem like a no-brainer that tenants would want to relocate to cities in the North.
While it may be discouraging for landlords in the North to see that their southern counterparts are seeing stronger rental growth, they should be under no illusion that rents up North are struggling in any way. The region has seen both house price and average rents grow significantly in recent years. According to the Hometrack rental tracker, average rents in the North West and Yorkshire both increased by 2.8% between Q4 of 2018 and Q4 2019. In addition to this, house prices in Manchester, Liverpool and Leeds increased by 3.3%, 3% and 2.8% respectively in the year to February 2020. There is still ample room for growth in Northern regions, compared to Southern regions where the market is becoming increasingly saturated.
While it’s difficult to say how the current COVID-19 crisis is going to affect the market going forward, it’s fair to say that cities in the North have a lot to offer for tenants and they should be the first port of call for investors who are looking to buy in the UK market.
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