Rents increase for the first time since the start of coronavirus pandemic

Rents in Great Britain rose last month for the first time since the Coronavirus pandemic began, according to newly released data from Hamptons International.

The figures show that properties in the countryside, rather than those in the city, are driving rental growth, reflecting a shift in demand from renters.

The average cost of a newly let property in the countryside rose to £919 per calendar month (pcm) in October, up 5.5% compared with the same period last year and more than triple the average rate of growth across Great Britain.

Meanwhile, rents in cities fell by 5.3% year-on-year to £1,336 pcm.  This is a complete reversal of October last year when rents in cities were rising by 7.2% year-on-year and falling in the countryside, albeit slightly by 0.2%. October 2020 rents in smaller towns and suburbs rose 2.2% year-on-year.

The Coronavirus pandemic has changed tenant behaviour, with many renters making the move out of cities to the suburbs and more rural locations.

There were 7% fewer applicants looking to rent in cities last month, but 29% more homes available to rent than at the same time last year.  This has put downards pressure on rents.

Meanwhile, demand for homes in the countryside rose 4% in October and stock levels were 48% lower than the same period last year.

City versus Country (October 2020)

 

Average Rent

Annual Rental Growth

YoY change in applicants

YoY change in the number of homes available to rent

Cities

£1,336

-5.3%

-7%

29%

Small towns & suburbs

£942

2.2%

-15%

-32%

Country

£919

5.5%

4%

-48%

Source: Hamptons International

Some 48% of landlords letting a home in the countryside were able to increase the rent when reletting their buy-to-let last month.  This figure dropped to 35% for landlords in city locations.

On a regional basis, rents outside London continued to accelerate, with prices in the north of England reaching a record high.

The average rent in the north increased to £689pcm in October, up 5.9% on the corresponding period last year. This set a new record for average rents in the three Northern regions (North West, North East and Yorkshire and Humber), as well as the highest rate of annual growth since the index began.

Rents in the South West also increased 5.9% year-on-year, marking the strongest growth since October 2015.

Meanwhile, London and Wales remained the only regions where rents fell.

Average rents in the capital cropped by 0.6% year-on-year in October, a smaller fall than the 2.9% annual drop recorded in September.

But although rents in London seem to be recovering, the gap between rental growth in inner and outer London has widened further.

Rents in outer London rose 3.3% in October, nearing pre-pandemic levels, while rents in inner London fell -14.9% year-on-year.

Last month the average rental property in outer London cost 18% less than one in inner London.  In October 2019 this figure stood at 32%.

Year-on-year rental growth

 

Oct-19

Oct-20

YoY change

Greater London

£        1,873

 £        1,861

-0.6%

   Inner London

£        2,564

 £        2,182

-14.9%

   Outer London

£        1,742

 £        1,800

3.3%

South East

£        1,088

 £        1,103

1.4%

South West

£           839

 £           889

5.9%

East of England

£           971

 £           993

2.3%

Midlands

£           702

 £           723

2.9%

North

£           650

 £           689

5.9%

Wales

£           674

 £           671

-0.4%

Scotland

£           674

 £           700

3.8%

Great Britain

£        1,026

 £        1,041

1.4%

Great Britain(Excluding London)

£           813

 £           835

2.8%

Source: Hamptons International

Aneisha Beveridge, head of research at Hamptons International, said: “Rents started to pick up steam in October.  Following six months of stagnation, rental growth accelerated to 1.4% across Great Britain, marking the first annual increase since March.  But the shift in tenant preferences since the spread of Covid-19 has meant that rents are now rising faster in country rather than in city locations.

“The flexibility of the rental market has meant that while some renters have decided to make a permanent move out of cities in search of more space, others have moved out temporarily.  The opportunity to work from home means tenants can save while paying less rent in more rural areas.  As a result, the gap between rents in cities and the countryside is closing.  Tenants making the move from city to country last month spent 31% less on rent, down from a 38% saving in October 2019.  But it seems as though these changes have been firmly priced in and we expect the gap to widen again next year.

“This change in tenant preference is one of the reasons why rents in Inner London are falling so much.  Meanwhile last month’s figures showed that the rental market in Outer London is recovering.  Outside of the capital, rents are rising quickly.  Rents in the North of England reached new record highs and the South West recorded the strongest growth in five years.”

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