The city centre rental market, considered to be one of the industry’s losers during the worst of the pandemic, is beginning to revive.
That’s the view of Zoopla, which has just issued a lettings market snapshot.
It says the impact of Covid was felt most acutely in the city centre rental markets of the UK’s major regional cities. Central Edinburgh, Leeds, Manchester and London were at the forefront of the rental slowdown, as offices remained closed and an extended hiatus in tourism took hold.
Stock moving over from short-term lets into the rental market, and more rental stock coming back to the market amid easing demand, led to a softening in rents in city centres, which are still down by 0.7 per cent in Leeds, 1.1 per cent in central Manchester, 3.2 per cent in central Edinburgh and down no less than 9.9 per cent in inner London.
However, Zoopla insists the city centre downturn is starting to reverse as the economy opens up, workers start to return to their offices, leisure activities restart, and renters return in search of a rental bargain and restoration of their social life.
It says renter demand is up 26 per cent in central Edinburgh, 12 per cent in central Leeds, seven per cent in inner London and five per cent in central Manchester in the month since Easter - and is starting to absorb the supply surplus that characterised the market over the past year.
Gráinne Gilmore, head of research at Zoopla, says the increased availability of mortgages for those with lower deposits may result in more people leaving the sector to buy their first home through 2021, but the wider economic uncertainty will limit this trend.
She says: “At the same time, the opening up of the economy and the slow return to ‘business as usual’ as the vaccine rolls out means demand will continue to build over the summer as more people move to rent their first property – although, as ever, this will be dependent on the economy opening up in line with the planned timetable.
“Demand will continue to rise in city centres as offices start to re-open and this, coupled with increased affordability levels in many cases, will start to counter the negative pressure on rents seen over the last 12 months.
“In London, where rents are down 9.4 per cent on the year, a modest reversal in rental declines has begun, but it will be a slow build back to pre-pandemic levels in inner London. The recovery will be uneven and we expect new or recently refurbished properties to attract higher levels of demand in the second half of the year.”