Birmingham new-build rents rise more than 50%

Rental values in Birmingham are climbing more quickly than any major city outside London, according to research by JLL.

The firm’s Big Six Residential Report, which compares Birmingham, Bristol, Edinburgh, Glasgow, Leeds and Manchester, shows average rents for new-build apartments have risen 58.8% in the last five years.

JLL is also forecasting that rents will rise by an average of 3.8% a year until 2030, the joint-highest amongst the “big six” cities, reflecting sustained demand and increasingly constrained supply.

The rises come as viability challenges continue to restrict supply of new rental properties in the city, with investment in the city’s Build to Rent market down by more than 50% over the past year, compared to the five year average.

But Birmingham still accounted for close to half of the BTR seen across the largest cities tracked by JLL last year, with £145m invested in the city – despite a constrained market for developers.

William Cox, Director of Residential at JLL Birmingham at JLL said demand from tenants remained “strong”, driving higher rental growth than the UK’s other major cities.

“While investment into the city hasn’t matched the highs of previous years, Birmingham is still significantly outperforming other regional markets in this area,” he said.

“There remains a steady confidence in what the city can offer with international investors like Heim Global demonstrating how Birmingham can still attract the funding it needs for major developments.”

The report shows a 4.2% increase in rents over the past year, as the supply of new BTR developments in the city remains constrained, with 38% fewer homes available to let across Birmingham in July compared to a year earlier.

Meg Eglington, UK Residential Research Associate at JLL, added: “Rental markets across our big six cities have become noticeably tighter over the past year. Tenant activity has been strong and available homes are being absorbed quickly, but so far that hasn’t translated into significant rental growth because markets entered the year with relatively elevated levels of stock.

“The important question is what happens next. If demand remains at its current level while availability continues to fall, there will be considerably more scope for that pressure to feed through into rents during the second half of the year.

“Ultimately, this comes back to supply. Viability constraints remain the biggest challenge to housing delivery, nationally and across our Big Six markets. Higher financing and construction costs are making it difficult to bring forward new homes, while regulation creates further challenges in parts of the market.”

The JLL Big Six Residential Report can be downloaded in full via the firm’s website.