Rents outside London rise at fastest rate for 13 years
The UK rental market is roaring ahead, with properties letting almost a week faster than in 2020, research shows.
Rents outside London are rising at their fastest rate since 2008 as people return to city centres. The typical price of renting a home in the UK, excluding the capital, now stands at £790 a month, costing tenants an additional £456 a year, according to latest Rental Market Reports.
The steep increase has been driven by renters returning to cities. But the surge in tenant demand has not been met by an increase in the number of homes to rent, forcing rents higher. Rents across the UK, excluding London, have risen by 5% in the last year, the highest level since our index began in 2008 and more than double the 2.2% rise recorded in January.
The south-west saw the biggest hike, with the cost of being a tenant jumping by 7.6% year-on-year. It was followed closely by the East Midlands at 6.8% and the north-east at 6.5%. Rent increases were particularly strong in some towns and cities, with Wigan and Mansfield seeing hikes of 10.5% and 10% respectively. Meanwhile, rents in Hastings, Blackburn, Barnsley and Norwich all grew by 9.4% or more. Despite the rise, these places remain some of the most affordable in which to be a tenant. A single earner has to spend an average of 21% of their income on rent, compared with a UK average of 32%.
At the other end of the scale, rents in London have dropped by 3.8% year-on-year. Even so, the rate at which rents in the capital are falling is showing signs of bottoming out, as tenants return to the city. Across the whole of the UK, including the capital, the average rent stands at £943 a month, 2.1% more than a year earlier. But with average earnings rising faster than rents, rental affordability is holding steady for tenants who are employed.
What is the demand for rental homes like?
Tenant demand is soaring. It was nearly 80% higher in August than average levels between 2017 and 2019. It’s being driven by a resurgence in city centre life, with people being drawn back as offices, bars, restaurants and other leisure facilities reopen. There are also seasonal factors at play, such as university students looking for accommodation ahead of the new academic year, graduates starting jobs and families moving before the school term starts.
The bounce back has been particularly marked in London, leading to rents in the 12 inner boroughs rising by an average of 2.3% between May and July. Similar spikes have been seen in Birmingham, Edinburgh, Leeds and Manchester. It’s reversing the decline seen during the earlier stages of the pandemic, when renters moved back in with families or relocated to more rural areas.
Is there a good supply of homes available to rent?
While demand so far this year has increased by 19%, the level of rental homes available has fallen by 13%. This mismatch is not only forcing rents up, it is also leading to the rental market moving at its fastest pace since 2016. The average time between marketing a property for rent and agreeing a tenancy is now just 15 days, compared with 20 in July last year.
Coastal locations, such as Hastings and Plymouth have the fastest-moving markets, with properties taking just over a week to let. Rental homes in many large cities, including Liverpool, Newcastle, Cardiff and York are also coming off the market quickly, with the time to rent averaging just under two weeks.
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