MHHG estate agents

The Manchester rental market continues to evolve, reflecting national trends while maintaining its unique characteristics. As we step into 2025, the market is witnessing significant shifts, influenced by supply and demand imbalances, affordability constraints, and ongoing policy changes.

Rental Market Becoming More Balanced

Over the past three years, rents for new lets in Manchester have surged by 24%, a trend driven by chronic undersupply and high demand. However, conditions are now showing signs of improvement, with rental inflation slowing to its lowest rate in 3.5 years. Despite this, the supply-demand mismatch persists, ensuring continued upward pressure on rents.

Although the number of rental properties has increased modestly, affordability remains a key concern. The average monthly rent in the UK now stands at £1,284, marking a 3% year-on-year increase. This is a sharp decline from last year’s 7.4% growth rate, reflecting the impact of affordability challenges rather than an improvement in rental supply.

Demand vs. Supply: An Ongoing Struggle

The number of homes available for rent has risen by 11% over the past year, while rental demand has dropped by 17%. However, the competition for rental properties remains intense, with an average of 12 renters competing for each available home—double the pre-pandemic levels.

Manchester’s rental market mirrors this national trend, with an increase in available listings, but still lagging behind pre-pandemic supply levels. The average agent in the UK now has 13 rental properties, up from 10 in 2023, yet 22% below pre-pandemic norms.

The Impact of Rental Reforms & Policy Changes

The private rental sector in England is undergoing significant policy changes, which could further limit the availability of rental properties. The upcoming Renters’ Rights Bill, set to take effect later in 2025, aims to reshape the landlord-tenant relationship. However, it also adds complexity and costs for landlords, potentially discouraging new investments.

Moreover, new energy efficiency regulations could further reduce rental stock. The government plans to require privately rented homes to achieve an energy rating of ‘A’, ‘B’, or ‘C’ by 2028. Currently, 45% of rented homes require upgrades to meet these standards, with 16% rated ‘E’, ‘F’, or ‘G’, making them at risk of being withdrawn from the rental market.

Regional Rental Inflation Trends

Rental inflation in the UK is now at its lowest since August 2021, with variations across different regions. While London’s rental growth has slowed to 1.1%, Northern regions continue to see higher increases. The North East reported a 6.3% rise, and Northern Ireland saw a 9% increase.

Manchester’s rental growth remains strong, influenced by its status as a key employment and student hub. However, rental affordability issues are encouraging tenants to stay in their current homes longer, reducing the frequency of new lets and dampening overall demand.

Future Outlook for Manchester’s Rental Market

Looking ahead to the rest of 2025, demand for rental properties is expected to remain high, albeit lower than in previous years. The total rental stock is unlikely to expand significantly due to policy changes affecting landlord profitability and regulatory compliance.

A key factor shaping demand is migration patterns. In 2024, the UK’s net migration fell by 20%, dropping from 906,000 in 2023 to 728,000. This trend is expected to continue into 2025, further easing pressure on rental demand, particularly from international students and workers.