The latest analysis from letting agency, Bunk, has shown that flood risk is dampening rental growth as tenants opt for higher ground.
Bunk looked at areas with a high to medium risk of flooding and how rental growth compares across these areas depending on the severity of the flood risk.
Between 2014 and 2019 areas where more than 30% of postcodes were at a high risk of flooding saw rental growth of 10.71%.
This compares to 12.75% in areas where 20-30% of postcodes are high risk, and 15.26% between 10-20%.
Halifax and Canterbury see low five-year rental growth
With 38.55% of its postcodes being at high risk of flooding, rents in Halifax increased by just 0.78% in the past two years and 1.78% in the past five.
In Canterbury, where 39.93% postcodes are at a high risk of flooding, rental growth has been slow in the past five years at 2.34%. However, they seem to be bouncing back, rising by 8.31% in the past two.
On average, UK rents rose by 11.86% between 2014 and 2019 and 3.54% between 2017 and 2019 – so both Halifax and Canterbury are lagging behind the average in the past five years.
Cambridge and Newcastle on the rise despite the risks Some areas are seeing very strong rental growth despite flood risks. Cambridge, for example, saw rental growth of 9.08% in the past two years and a massive 31.16% between 2014 and 2019. This is despite having 36.73% of its postcodes in high flood risk areas, as well as 39.90% in medium flood risk areas.
It’s a similar story in Newcastle, where 25.93% of postcodes are at a high risk of flooding.
While rents have grown by a steady 5.91% between 2017 and 2019, in the past five years they’ve soared by 30.60%.
Tom Woollard, Co-founder of Bunk, commented: “When investing in property you need to do your homework on the area as a whole and not just the local property market. While nature can be unpredictable, buying in an area with a known risk such as flooding can see your financial return wash down the drain as you spend thousands on repairing your property and getting it back to a state that is fit for purpose in the rental market.
Of course, with risk often comes reward and while there is a notable correlation between the risk of flooding and a lower level of rental growth, investing in an area with high tenant demand, such as Cambridge, can still prove lucrative.”