Supply issues expected to drive rents up despite cost of living pressure

house keys for home ownershipRental voids fell across almost all regions of the country as February proved to be another busy month for the lettings sector.

Greater London saw a 24% reduction in the length of void periods – dropping from 17 to 13 days. And the East Midlands recorded a 25% drop – from 24 to 18 days, according to Goodlord.

The biggest change was seen in the South West, where voids reduced by a sizeable 27% during February – moving from 26 to 19 days.

The North East, North West and South East also all recorded reductions in average void periods.

The only region to see an increase in voids was the West Midlands, where a rise was observed. Numbers increased from 18 days to 22 days – a 22% increase.

Despite the supply-demand imbalance in the market, rents held steady last month and are yet to return to the price peaks seen last autumn.

Most regions saw a small drop in the average cost of rent; the England average reduced from £994 per property to £968 – a 2.6% decrease.

The biggest change came in Greater London, despite diminishing void periods. There was a 3.9% reduction in the average cost of rent in the capital, from £1,675 to £1,609.

However, there are signs that rents could rise in the near term, as salaries continue to rise.

The average salary for employees in England has increased steadily over recent months and is now £28,115 per tenant, up from £26,111 per tenant last year.

Tom Mundy, Goodlord COO, commented: “We are seeing a clear, consistent picture when it comes to the market – demand is high and stocks are low. This is driving the low void pattern we’re seeing across the majority of the country. We are, however, seeing rents behave in a slightly more stable way which is more in keeping with what we’d expect at this time of the year.

“The shifts in average salaries for tenants is something to keep an eye on – as employers respond to the Great Resignation and staff court higher pay packets, we are seeing take home pay increase. This could well begin to drive up rental prices once again as tenants max out their budgets in order to secure the best properties.”

Average cost of rent

November 2021

December 2021

January 2022

February 2022

East Midlands

£840.04

£835.94

£853.33

£841.92

Greater London

£1,634.38

£1,671.24

£1,675.08

£1,609.05

North East

£728.21

£716.63

£740.57

£717.00

North West

£787.88

£782.78

£799.92

£770.82

South East

£1,067.63

£1,074.67

£1,081.52

£1,070.63

South West

£1,001.04

£999.37

£990.81

£967.93

West Midlands

£801.01

£818.33

£815.61

£798.81

England

£980.03

£985.56

£993.83

£968.02

Average void periods

November 2021

December 2021

January 2022

February 2022

East Midlands

16

22

24

18

Greater London

13

16

17

13

North East

16

17

18

17

North West

17

17

22

18

South East

17

18

19

17

South West

23

18

26

19

West Midlands

21

16

18

22

England average

18

18

20

18

Average tenant salaries

October 2021

November 2021

December 2021

January 2022

February 2022

East Midlands

£25,861.85

£27,168.24

£26,926.03

£25,727.40

£27,228.48

Greater London

£36,256.36

£38,627.17

£37,792.61

£40,467.34

£39,585.36

North East

£24,773.37

£23,908.05

£24,082.76

£25,662.85

£25,878.46

North West

£22,772.15

£23,417.73

£22,345.64

£24,086.63

£22,814.68

South East

£30,656.23

£28,154.30

£28,302.72

£30,312.29

£29,639.05

South West

£27,239.70

£27,278.43

£27,883.29

£28,216.61

£25,924.04

West Midlands

£24,478.49

£24,828.98

£23,774.67

£25,160.92

£25,740.20

UK average

£27,434

£27,626

£27,301

£28,519

£28,116

 

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One Comment

  1. northernlandlord

    This is basically a rubbish article. The rents stated per area are averages. Better to deal with median data like the ONS does.
    According to the ONS the median rent in my area (North West) 2020/21 was £600 month with the upper quartile rent (top 25%) being £750 month and lower quartile being £495 month. The figures here give an average of North West rents of £782 which is miles out. Same goes for all the other areas.  So who to believe the ONS data based on a survey of 66,000 actual rents or the data presented here?
    The presented data clearly indicates that as salaries rise rents have dropped. If you average out the void data you find that overall void periods have actually remained the same over the period. The article alludes to “signals” (unspecified) contrary to their presented data that rents will increase in the near term.
    I am sure that rent increases will apply to new tenancies as they arise, landlord costs have risen just like everybody else’s. Contrary to popularised belief I do not think that landlords continuously hike rents to keep up with dubious published averages. Most of my acquaintance don’t do this for good long term tenants.
    Supply issues are mentioned in the title as a factor for rent increases but are not addressed in the article at all. What are the issues? We can only assume that either the number of available properties is dropping or demand is increasing or maybe it’s a combination of both. Either way the article tells us nothing.

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