City centre demand has returned after the ‘flight to the country’ – but hybrid working has boosted commuter locations with a better quality of life.

Those are the findings of a new survey by Savills, which says an influx of urban workers with higher spending power has pushed up rents in many markets.

However, city centre demand has returned as students abandon remote learning and go back to university, and transport hubs are once again a priority for a new, young, mobile workforce.

Savills’ Q3 agents survey shows that half of tenants now rank proximity to transport as their number one priority.

Shifting work patterns

Shifting work patterns and lifestyle choices meant a number of cities performed exceptionally well during the pandemic, according to the report.

Bristol and Glasgow, already home to well-established rental markets, have seen rental growth of 6.7% and 6.5% respectively since March 2020, due to heightened interest from London and Edinburgh lifestyle relocators.

The potential to work from home has expanded commuter belts and there is more choice than ever for those working in the UK’s largest cities.

This has supported letting rates for build-to-rent schemes, with Bristol schemes in particular receiving huge interest from London relocators.

The gap between tenant demand and new instructions has widened and is at an all-time high, according to RICS surveyors surveyed by Savills, which says the imbalance will support short-term rental growth, with stock levels remaining low across the UK.

Build to rent stock

The UK’s build-to-rent stock now stands at 63,950 completed homes, with a further 42,000 homes under construction. The future pipeline currently stands at 99,500 homes, including those in the pre-application stage. This brings the total size of the sector to 205,500 homes completed or in development.

New home starts outside of London have continued to drive the construction pipeline. In the year to Q3 2021 nearly 12,000 homes have started construction in the regions – a new high.

However, starts within London remain subdued. In the year to Q3 2021 more than twice as many schemes started construction outside of the capital (43) than within (19).

With London starts faltering, the construction pipeline has shrunk by 9% over the past 12 months in the capital, while the regions have seen their construction pipeline rise by 22%.

There is also a continuing shift towards regional towns and cities with strong fundamentals.