Nigel Terrington, CEO of Paragon Banking Group, recently highlighted how rising immigration is placing added pressure on the UK rental market. Simply put, more people means more homes are needed, and in many areas, supply is failing to keep up. As a result, rental prices continue to rise, especially in key urban centres where new arrivals typically settle due to access to jobs, services, and community networks.
This demographic trend is especially important for investors in the buy-to-let sector. With homeownership remaining out of reach for many -due to high deposit requirements, strict mortgage rules, and rising house prices -renting is the only viable option for a growing number of people. For investors, this creates a resilient tenant base, low vacancy rates, and upward pressure on rental yields.
Cities like Manchester, Liverpool, Leeds, and Birmingham are already feeling the effects. In many of these markets, rental growth has exceeded 10% year-on-year, driven not only by immigration but also by a lack of new housing supply and ongoing urban regeneration. For example, in 2024 alone, Manchester saw a 13.2% increase in average rent, while Birmingham recorded a 10.5% jump.
Importantly, the impact of immigration on rental demand isn't limited to large cities. Regional towns with good transport links are also benefiting, particularly those with employment opportunities in healthcare, construction, and logistics -sectors that often attract international workers. Investors willing to look beyond traditional hotspots may find excellent value in these emerging markets.
Of course, rising demand also brings increased scrutiny. Government proposals to reform rental laws - including longer tenancies and stricter energy efficiency standards -mean investors must stay informed and compliant. But for those who take a long-term view, the fundamentals remain solid: population growth equals housing demand.
In a market defined by uncertainty, the steady upward pressure from immigration provides a clear signal: the UK rental sector is set for sustained growth. For investors, this isn’t a crisis -it’s a call to action. The time to expand or enter the market may be now, while supply still lags behind the demand.
