Rocketing Cost of Living Pushes Rents Sky High
Rocketing inflation pushes tenants' living costs through the roof as rents continue to rise at the fastest rate since July 2016.
The Office for National Statistics (ONS) says buy-to-let rents jumped by 2.4 per cent in the year to the end of March 2022 even though a soft market in London kept increases to just 0.4 per cent.
Rents in London are stagnating, with a meagre 0.2 per cent change for the 12 months to February.
Rent growth in London is the lowest in the UK. The ONS report blames the malaise on decreased demand as more people work from home following the COVID pandemic.
The most significant rent surge was 2.8 per cent in Scotland, while tenants paid 2.2 per cent more in England and an extra 1.6 per cent in Wales.
Rents have risen 12.9 per cent since January 2015, says the ONS.
Rent changes by region
East Midlands landlords enjoyed the most significant rent rises until March 2022, rising 3.8 per cent. The East of England saw the second-highest increase - 3.7 per cent.
London lags behind the rest of the UK again with a modest 0.4 per cent rise.
The next lowest region was the North East, where rents rose 2.4 per cent.
Buy to let rents surge past a grand a month
Tenants are paying an average rent of £1,068 a month, according to tenant referencing firm Homelet.
The annual change for the year to the end of March 2022 was 8.7 per cent - including a rise of 0.8 per cent from February.
At variance with the ONS, the report claims the average rent in London is £1,770 a month - a 0.7 per cent monthly increase and 11.6 per cent more than in March 2021.
Wales was the only region where rents decreased by 0.1 per cent to £726 monthly.
Homelet CEO Andy Halstead said: “Demand will continue to outstrip supply, and when that is the case, rent prices will surely continue to grow. The March figures are a perfect example of this, with the average rental price for the UK rising almost an entire percentage point in the space of a single month.
“Issues surrounding the cost of living and energy prices have been widely reported in recent weeks, and it will be in absolutely no one’s interest if a lack of supply means that rental properties continue to be so hard to come by for consumers. The country is reliant on a strong rental market, a fact that was underlined again and again throughout the peak of the pandemic.”
How rents have changed where you are
|Yorkshire & Humberside
|East of England
|UK excluding London
Guild of Landlords Rent Digest – FAQ
For landlords confused by the stats and what they mean, here are answers to the most asked questions about rents.
Why do the rent indices show different results?
Check the data carefully. Other indices cover different periods, and the samples vary between reports.
The ONS has the most extensive sample, so the most reliable figures should return, but the time to collect and analyse the statistics often means the ONS data lags behind the rest of the sector.
ARLA derives insights from letting agents and provides what's known in the trade as a sentiment survey rather than factual data.
Homelet statistics come from customer data, which may not fully reflect the market.
Should landlords raise rents in line with the stats?
That's a business decision for landlords. The rent statistics indicate how the market moves but do not reflect demand from tenants and property standards in local neighbourhoods.
Don't forget that the data is historical, showing what's happened rather than what will happen.
Which rent index is the best?
That's up to individual landlords. For instance, one index with a solid customer base in the same area as a landlord's portfolio may align more closely with market rents for that neighbourhood.
Average data is not good if you don't have an average home, and median rents will cover everything from a room in a shared house to a four-bedroom home.
Extra research with local letting agents is likely to indicate better where a landlord should pitch a competitive rent and stop them from underselling.
How has coronavirus disrupted the statistics?
Although several letting agents and property organisations publish regular rent statistics, many have been affected by the coronavirus lockdown that has their reports suspended or delayed.
Subscribers get full access to exclusive content, including forms, articles and discounts, plus our time saving Tenancy Builder tool.
Signup for our free weekly digest and get the latest news and guidance straight to your inbox (some content requires a paid subscription).
View Related Handbook Page
Investing in a private rented property can be achieved in a variety of ways. Sometimes landlords inherit a property that they then turn over to renting. Sometimes owners of properties become unintentional landlords because they are unable or unwilling to sell a property at the value the market currently dictates.