Strong demand for city centre living has pushed Liverpool rents to record levels, rising 24% in three years, but one expert says there are signs they may be reaching the limits of affordability. Tony McDonough reports
In recent years residential landlords in Liverpool city centre have reaped the rewards of rents soaring to record levels.
According to Alan Bevan, managing director of City Residential, apartment rents have risen by 24% over the past three years. Average rent for a studio is £715 a month, £865 for a one-bed apartment and £1,050 for two bed (excluding build-to-rent developments*).
However, rental growth over the past year has slowed to 6% and Alan says there has been a “noticeable decrease in activity levels in the last few weeks”. The spring, he insists, is usually a quieter time anyway.
But he added there are signs of a wider slowdown in the course of the normal medium to long-term supply and demand dynamic.
There is certainly no sign of a lessening in appetite for city centre living. Excluding students, there are currently more than 62,000 people living in around 22,200 homes in the city centre. And, including stalled and proposed developments, another 14,000 apartments are in the pipeline.
In his latest quarterly analysis of the Liverpool city centre market, Alan said: “The first quarter of 2025 saw a continuation of strong activity from the fourth quarter 2024 with levels of activity stronger than in previous years, although there has been a noticeable decrease in activity levels in the last few weeks.
“Many landlords are looking to increase rents on the expiry of fixed-term tenancies to keep up with their own increased costs and in most cases, tenants are obliging although we have seen a slowdown in the level of these rises.”
He added: “With the continual upward rise in rents there was a danger that at some point we will start to see a rise in vacating tenancies and a reluctance to pay the higher rents and over the last few weeks that appears to be the case.
“Some tenants are beginning to question the sense in paying ever increasing levels of rent and are starting to consider buying as an alternative option even with current higher mortgage rates.
“We are seeing a lot more first-time buyers considering buying instead of renting.”
One thing that is muddying the waters in both the rental and sales sections of the city centre market is the Building Safety Act which was introduced in the wake of the Grenfell disaster in London.
This legislation has faced building owners with having to replace potentially dangerous external cladding. At Grenfell in 2017, 70 people died when a blaze ripped through the tower block, with the cladding used identified as a reason the fire spread so quickly.
Consequently, many people are finding it near impossible to sell the leaseholds on their apartments until the cladding on their buildings is replaced.
This has led to landlords having to rent out their properties rather than sell them. Alan added: “Around 60/70% of the properties in the city centre are currently impacted, resulting in vendors not being able to sell their apartments.
“There are some small signs of an improvement but it will take a substantial amount of time and effort to sort the issues out.”
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Once the cladding issues do begin to get fixed it could mean more apartments will become available for sale, potentially reducing the supply for rent and putting fresh upward pressure on rents.
However, more for-rent developments currently in the pipeline means supply may keep up with demand and although rents may continue to rise, they may not do so at the levels seen in the last three years.
Click here to read City Residential’s full report
*Build-to-rent developments are typically large schemes funded by institutional investors. They are usually higher spec than a standard rental block and often include extra amenities such as gyms and cinema rooms. They will charge rents up to 20-30% higher.