The rental sector has turned into a two-speed market between London and the rest of the UK, new research from Zoopla has found.

Annual change in rent in the UK, excluding London, grew by 1.7 per cent but London rents fell by 5.2 per cent.

Zoopla says rental growth is underpinned by a mismatch between tenant demand and the number of rental homes on the market.

It also points to stricter mortgage lending as a result of the pandemic leading to more people staying in rented accommodation, especially those with smaller deposits as high LTV lending remains scarce in today’s market.

Rents down in London

London has been impacted by changing working practices due to the coronavirus pandemic as well as weaker tourism.

The move towards working from home has particularly hit central London, where rental properties normally used by workers for part of the week are coming back to the market.

Restricted tourism has impacted the short-term rental market, with many landlords now offering long-term rentals instead.

However, rental demand is stronger in outer London boroughs where rentals tend to offer more space and are more likely to come with gardens.

Mixed picture in other cities

Other cities to experience annual falls in rental growth were Edinburgh, down 1.6 per cent, Manchester dipped down by 0.1 per cent and Birmingham fell by 0.5 per cent. There were larger declines in Coventry, down 2.5 per cent and Reading fell by 1.8 per cent.

Cities that have seen rents rise include Bristol, Glasgow and Cardiff recording growth of 3.8 per cent, 2.4 per cent and 1.8 per cent respectively.

Demand for space and gardens

Just like buyers, the first lockdown led many renters to reassess their home and in some areas, rented houses are more popular than flats.

Zoopla’s data shows the most popular search terms are gardens, parking, garage, balcony and pets.

The timeline of renting a property has also shortened. The time it takes to rent a house and a flat in the UK, on average, is 16 days and 18 days respectively. This is down from 20 days last year for both types of property.

Hometrack managing director David Ross says: “Despite a very clear split between London and the rest of the UK, our research in consumer behaviour within the capital provides some confidence in the longer-term outlook. We’re seeing potential new rental hotspots emerging in extended commuter belt territory.

“However, the impacts of employment vulnerability and decreasing wages nationally may put downward pressure on rental values as we move into next year.

“The rate of BTL lending has moderated to pre-coronavirus levels, with new applications now sitting at 95 per cent of March totals.”