In the UK, it has long since been regarded that the south has had the strongest property investment game compared to the rest of the country. Now, that may no longer be the case. Data being produced from giants like Rightmove and Zoopla indicate that rents might actually be rising faster in the north. This, twinned with lower property prices and higher rental yields, means that the north is quickly outpacing the south in terms of the strength of property investment.
The gap between rents paid in the north and south of England has narrowed to its lowest point in over 11 years, according to recent figures. In its latest monthly lettings index, property company Hamptons revealed that the average rent for tenants in the north of England in August was £960 per month, which makes it a 9.6% increase compared to the previous year. This figure is 37% lower than the £1,317 average rent in the south, the smallest percentage difference since the index began in 2013.
So, what’s it all about?
Northern Powerhouses: New Markets and New Interest
The north of England has an area that has, traditionally, been overlooked. In the past, it garnered little investment attention, but new statistics and recent trends have turned this on its head. Currently, the North is the place to be and it’s where you should be investing your cold, hard cash.
Over the past couple of decades, the north has seen huge regeneration and plenty of investment from both the council and private sectors. Projects like the Northern Powerhouse initiative have poured billions into infrastructure, education, and business development, boosting economic growth and job creation.
As a result, the demand for rental properties has surged. Young professionals, students, and families are moving to northern cities en masse, attracted by the employment opportunities and the cheaper living costs, especially compared to London. This demand has naturally pushed up rental prices, leading to stronger year-on-year growth than many southern cities are currently experiencing.
The South: Still Strong, But Slowing Down
While the South—especially London—still boasts the highest rental prices in the country, the rate of rental growth has begun to slow down somewhat. While this may be alarming, it doesn’t mean they’ve stopped or your property isn’t appreciating in value. But why?
Since 2023, the Office for National Statistics has found that London rents have been growing more slowly than the UK average. After the COVID-19 pandemic, there was an exodus of tenants looking for more space and (preferably) gardens. Quite a few moved back in with family, for a myriad of reasons. This fall in tenants has presumably impacted the trends we’re seeing today. According to Knight Frank, although London rents remain the highest in the country, the rental growth seen in the past year only stood at 7%.
Why is Everyone Moving Up North?
There are a few reasons why rents are rising so fast:
- Affordability: Even with recent price increases, northern cities are still comparatively much cheaper than the south. Investors are keen to purchase properties for a lower price, as it means higher yields.
- Economic Development: Cities like Manchester and Leeds have transformed into major business hubs, attracting professionals in finance, tech, and creative industries. This has driven a surge in rental demand, particularly for high-quality, modern apartments that suit modern life.
- Student Populations: Northern cities are home to some of the UK’s largest universities. With a large student population that often stays on after graduation, there is a constant stream of renters.
Impact on the Property Market
This phenomenon presents a pretty great opportunity for investors looking to expand to other cities and diversify their portfolios. With northern rents rising faster, and comparatively lower housing costs, it means rental yields are often much higher for northern properties. Cities such as Manchester, Birmingham, and Leeds have consistently ranked high in terms of rental yields, providing a strong return on investment for landlords.
With rental demand continuing to rise, especially in areas undergoing regeneration, northern property investments are poised for long-term capital growth. While the South, particularly London, remains a stable and mature market, it may offer lower yields and slower rental growth.
Summary
The tide is turning in the UK’s rental market, with northern regions experiencing faster rental growth than the South. This shift is being driven by affordability, economic development, and increased demand, making northern cities increasingly attractive to both tenants and investors alike. While the South remains a valuable property market, those looking for higher yields and more dynamic rental growth may find the North holds significant potential for future investments.
About Us
North Property Group is a premium property investment agency and lettings agency focusing on premium UK real estate. We are a dedicated team of agents that can help you find your next property investment opportunity. We’re born and bred in the north and understand the market well here, so we can give expert advice. Book a free consultation with us today to start your journey of investing in off-plan UK property.