Nationwide buy-to-let specialist, Sequre Property Investment, has revealed that while an inner city rental property still commands a higher monthly rental income, rental homes in outer city areas have seen stronger growth over the last year.
Sequre Property Investment analysed rental market data for London, Manchester and Birmingham and how it differed when comparing inner and outer city areas.
The figures show that inner city rental markets attract the strongest levels of monthly rent. On average across all three cities, the monthly cost of renting within an inner city area sits at £1,152 versus £908 per month in the outer city market – a difference of 27% or £244 per month.
London is home to the biggest difference, with rents across the inner city rental market coming in 37% higher on average, with a 26% difference in Manchester and just a 9% difference in Birmingham.
However, when it comes to annual rental growth, the outer market across each city has fared far better than the inner city rental market.
On average across all three cities, annual rental growth across outer city areas has remained largely flat, while across inner city rental areas it has fallen by -4.4% in the last 12 months.
Manchester has seen the strongest performance, with inner city rental values remaining largely unchanged in the last year while across the city’s outer rental market, values have climbed by 3.7%.
In Birmingham, outer city rental values are up 2.2% versus a marginal 0.3% uplift across the inner city.
London’s rental market has struggled across the board, with just a 1.1% increase in rental values across outer city areas and a notable -7.8% drop across the capital’s inner city areas.
Sales Director at Sequre Property Investment, Daniel Jackson, commented: “It’s clear inner city rental markets are still struggling due to the decline in demand caused by the pandemic, despite a gradual return to normality from a social standpoint and with regard to the workplace.
This is particularly evident across the London market, where rental values have plummeted across inner city areas, while they’ve also struggled in outer city areas.
The good news is that elsewhere, outer city rental values are on the up, with both Manchester and Birmingham seeing very healthy levels of growth. This suggests that tenants are now starting to make their return and this is a trend that should soon reach our city centres and help boost values across inner city rental markets.”