MHHG estate agents

Executive Summary

The Manchester private rental market in July 2025 shows strong growth, with average monthly rents reaching £1,316, a 5.8%annual increase. This growth is slightly below the North West average of 7.2% and the England average of 6.7%. The market is driven by high tenant demand and constrained supply.

Demand is fueled by Manchester's strong economy, significant population growth (projected 10% increase in 2025), and a continuous influx of young professionals and a large student population. Supply is limited by subdued new landlord instructions and building rates that lag demand.

Despite house price fluctuations, Manchester remains an attractive buy-to-let market, offering average gross rental yields around 6.3%, well above the national average. High-yielding areas include Fallowfield and Ardwick.

Current Rental Market Performance (July 2025)

Average Rental Prices and Growth

As of July 2025, the average monthly private rent in Manchester is £1,316, a 5.8% increase from £1,243 in July 2024. This growth is lower than the North West regional average of 7.2% and the England average of 6.7% in June 2025.

Key Drivers of the Rental Market

Demand-Side Factors

Population Growth: Manchester's population is projected to increase by 10% in 2025, driven by young professionals and students. The city center alone is expected to house 100,000 people by 2026.

Economic Strength & Employment: As a major economic hub, Manchester attracts professionals with strong job opportunities from companies like Amazon, BBC, and Google. The city's employee count rose 5.8% between 2022-2023, outpacing regional and national growth.

Shift from Homeownership: High mortgage rates and living costs make homeownership less accessible, pushing more individuals and families into the rental market.

Student Population: Manchester has over 100,000 students, including 20,000 international students, creating significant demand for both general and purpose-built student accommodation (PBSA). The student bed supply gap is projected to increase by 15,955 beds by 2026.

Investment Landscape and Rental Yields

Overall Attractiveness

Manchester remains a highly attractive buy-to-let market, offering an average gross rental yield of around 6.3%, significantly above the national average. This is supported by consistent high rental demand and competitive entry prices.

High-Yielding Areas

Fallowfield (M14): Student hub with 10.6-12% gross returns.
Ardwick (M12/M13):Near city center, offers 7.5-8.2% yields.
Salford Quays/MediaCityUK: Attractive to professionals, 6-7% yields.
Ancoats/New Islington: Trendy, 5-6% yields for one-bedroom apartments.
Pendleton, Salford: Strong demand and supply, good yield performance.

Property Price vs. Rental Growth Impact on Yields

The divergence between rising rental values (expected 4% annually until 2028 ) and the provisional dip in house prices creates a favorable environment for rental yields. Robust rental income ensures healthy returns for buy-to-let investors.

Mortgage Rates and Financing

Buy-to-let mortgage rates in Manchester averaged around 4.89% for 2-year fixed deals and 5.14% for 5-year fixed terms at 75% LTV in June 2025. Recent Bank of England rate cuts have stabilized mortgage rates around 4.6%, making financing more attractive for investors.

Conclusions and Strategic Implications

The Manchester rental market in July 2025 is strong, with rising rents driven by high demand and limited supply, despite a provisional decline in house prices.
For landlords and investors, Manchester offers compelling opportunities with high rental yields (average 6.3%) and stable income streams due to consistent demand and short void periods. Adapting to new regulations like the Renters' Rights Bill will be crucial.
For tenants, the market remains competitive with upward pressure on rents. However, ongoing urban regeneration and housing strategies aim to increase supply, and the Renters' Rights Bill seeks to provide greater security and improved living conditions.