Runaway Rents Hit 15-Year High
Runaway rents are defying the cost of living crisis as they surge to the highest level in 15 years.
Although most major rent trackers disagree about how much renters are paying, they all agree rents have soared to record levels.
The Deposit Protection Service (DPS) data shows rents rose by 2.47 per cent to an average of £870 a month in the second quarter of this year - the most significant quarterly rise since DPS started keeping records.
The yearly increase was posted as 8.21 per cent, adding an extra £66 to annual rental costs.
DPS managing director Matt Trevitt says: "The last 12 months of rent increases, including a significant acceleration in the previous quarter, shows that the price of renting forms a substantial part in rising living costs across the country.
London rental market rebounds
"A mixture of tenants moving back into cities, continued desire for larger rental properties with more space, and a current shortage of properties of all types is causing rent prices to rise.
"Despite the current economic environment, many tenants still seem prepared to pay to secure a rental property."
The highest rental growth was in the North East - traditionally the cheapest region to rent a home - where rents increased by 10.75 per cent in a year from an average of £645 to £714 a month.
The data also revealed a rent recovery in London, with an annual 9.44 per cent rise, taking average rental costs from £1,314 to £1,438 a month.
New data from tenant referencing firm Homelet echoed the unwelcome rent rise news for tenants.
The company confirmed London as the highest growth spot with rents up 13.6 per cent in the 12 months to July. Average rents in the capital are now £1,868 after months in the doldrums, mainly due to the COVID pandemic forcing people to work from home.
But London was not an exception. Every English region recorded rent rises taking the average UK rent up 9.5 per cent in a year to £1,127.
HomeLet CEO Andy Halstead said: “This month’s figures paint a picture of a rental market that is struggling to meet the needs of renters or landlords, with spiralling prices a bad sign for both parties.
“One of the main factors leading to rising rent prices is a lack of supply on the market to match demand. This problem could worsen if landlords continue to leave the market, leaving a rapidly shrinking supply of available rental properties. The issue is reflected by the overall findings from our recent Landlord Survey, where one in five landlords that we spoke to said that they expect to reduce their portfolio or leave the sector entirely soon – this figure rises higher to nearly one in four for landlords based in London.
“The same survey revealed that four out of five renters are worried about how they will pay their rent. A market too volatile for landlords to rely on receiving rents due, and properties too expensive for renters to cope with, is clearly unsustainable.”
How rents have changed where you are
|Yorkshire & Humberside
|East of England
|UK excluding Greater 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.
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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.