Rental costs on an ‘upward trajectory’

Across Great Britain the pace of rental growth continued to increase in June, with rents rising by an average of 8.5% year-on-year.

A lack of stock is placing upward pressure on rental values, with 46% fewer homes on the market than at the same time two years ago, according to the data provided by Hamptons International.

 

Last month eight of the 11 regions recorded the biggest annual increases since the lettings index began in 2014.

 

Wales, the West Midlands and London were the only regions not to register record rental growth.

 

London in particular has been hard hit by the pandemic, with rents falling across the city, but that trend looks set to change.

 

Rents in inner London surged 4.3% in June from the previous month, the fastest pace on record, as the easing of lockdown restrictions lured tenants back to the capital.

This is the first time since the start of the pandemic that rents in London saw a monthly increase, averaging £2,103 per calendar month in June.

Rental prices were boosted as the number of tenants looking for new properties increased by 45% in June compared with the corresponding month in 2019, while there is a lack of available homes.

Aneisha Beveridge

Aneisha Beveridge, head of research at Hamptons, said: “Over the course of the pandemic, Inner London landlords have suffered more than investors anywhere else in the country.  But in recent months rental growth here has changed course and is now on an upward trajectory.  We are forecasting that rents in Inner London will return to pre-pandemic levels within 12 months.

“That said, and despite a recovery, rents in Inner London are likely to remain lower than they would have been had the pandemic not happened.  A relatively buoyant recovery has ensued as restrictions have been lifted, but some scarring is likely to remain as tenants become less closely bound to their office desk and international travellers remain in short supply.

“Nationally, the last 12 months have seen five years of pre-pandemic growth squeezed into a year.  Rents are rising at such a pace that monthly rental growth figures could, in more normal times, be mistaken for annual ones. While this growth is underpinned by a lack of stock, it will ultimately be tapered by affordability.”    

Average rent on a new let

 

June-20

June-21

YoY Change (%)

YoY Change (£)

Greater London

£1,696

 £1,751

3.3%

£55

   Inner London

£2,518

 £2,103

-16.5%

-£415

   Outer London

£1,540

 £1,685

9.4%

£145

South East

£1,050

 £1,217

15.9%

£167

South West

£838

 £964

15.1%

£126

East of England

£944

 £1,049

11.1%

£105

Midlands

£712

 £753

5.8%

£41

North

£650

 £710

9.3%

£60

Wales

£688

 £712

3.4%

£24

Scotland

£659

 £726

10.2%

£67

Great Britain

£1,007

 £1,092

8.5%

£85

Great Britain (Excluding London)

£858

 £951

10.9%

£93

Source: Hamptons

The months when annual rental growth hit new records over the last decade

Date

Annual Rental Growth

Average Rent in Great Britain

*Jun-21

8.5%

£1,093

May-21

7.1%

£1,054

Dec-14

7.0%

£924

Oct-14

6.7%

£932

Nov-14

6.5%

£929

Jan-15

6.1%

£922

Apr-21

5.9%

£1,040

Feb-21

5.6%

£1,063

Feb-15

5.6%

£920

Sep-14

5.4%

£928

Source: Hamptons

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2 Comments

  1. Will2

    Really  8.5% year on year is that for one year or 20 years?

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  2. paulgbar666

    Such is the demand for rental property that affordability will be afforded.   That will mean reductions in discretionary spending.   Any tenant having surplus funds after all normal domestic expenditure can clearly afford more rent.   LL just have to find the highest price point that is afforded.   Tenants won’t have much choice than to afford rents whether they like paying the rent levels or not. Reducing capacity of the PRS which Govt is hell-bent on achieving which it is succeeding in can only mean tenants will be paying a lot more in rent.   Of course Govt is hoping that BTR will come to the rescue as Govt slowly but surely forces small LL out of business.   But that will NEVER happen.   I’ve no idea how Govt proposes to house millions of homeless tenants whilst it drives small LL out of business with their bonkers anti-small private LL policies.

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