Flood Risk Puts a Dampener on Property Rental Growth

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Flood risk areas are experiencing lower rental growth over the past five years, as tenants look for safer high ground.

Research by landlord letting agency Bunk has shown that areas at risk of flooding enjoy lower rental growth than others.

They 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 per cent of postcodes were at a high risk of flooding saw rental growth of 10.71 per cent.

This compares to 12.75 per cent in areas where 20-30 per cent of postcodes are high risk, and 15.26 per cent between 10-20 per cent.

With 38.55 per cent of its postcodes being at high risk of flooding, rents in Halifax increased by just 0.78 per cent in the past two years and 1.78 per cent in the past five.

In Canterbury, where 39.93 per cent postcodes are at a high risk of flooding, rental growth has been slow in the past five years at 2.34 per cent. However, they seem to be bouncing back, rising by 8.31 per cent in the past two.

On average, UK rents rose by 11.86 per cent between 2014 and 2019 and 3.54 per cent between 2017 and 2019 – so both Halifax and Canterbury are lagging the average in the past five years.

However, some areas are seeing very strong rental growth despite risk of flooding.

Cambridge, for example, saw rental growth of 9.08 per cent in the past two years and a massive 31.16 per cent between 2014 and 2019.

This is despite having 36.73 per cent of its postcodes in high risk areas, as well as 39.90 per cent in medium risk areas.

It’s a similar story in Newcastle, where 25.93 per cent of postcodes are at a high risk of flooding.

While rents have grown by a steady 5.91 per cent between 2017 and 2019, in the past five years they’ve soared by 30.60 per cent.

Co-founder of Bunk, Tom Woollard, 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.’

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