The United Kingdom is experiencing considerable growth in the rental market, with average rents in Great Britain surpassing the £1,300 per calendar month (pcm) threshold for the first time showcasing the changing landscape of the rental market.
It was only 11 months ago that rents crossed the £1200 pcm mark and 37 months since rents passed £1,000 pcm.
The national landscape
A significant milestone was observed in August, when the annual rental growth for newly let properties reached 12.0 per cent, with average rents £140 higher per month compared to the same time the previous year, marking the highest increase since the start of the Hampton’s Lettings Index in 2014.
The Scottish surge
Scotland experienced an unparalleled rise in August, with rental prices soaring by a record 13.4 per cent, amounting to £111 – the largest increase in over a decade – propelling Scottish rents to far surpass the performance in Northern England (9.7%) and the Midlands (10.7%).
The London marketplace
London continues its meteoric rise, with rents increasing at a double-digit rate in 16 of the last 18 months, adding £5,508 to the average rent in the Capital.
While a 30 per cent rise in available rental homes from last year suggests a possible easing of upward pressure on rental growth, the lingering deficit in rental stock, still 39 per cent below 2019 levels, continues to reinforce the trajectory of future rental growth.
Aneisha Beveridge, Head of Research at Hamptons, emphasised the strain on mortgaged landlords who are feeling the financial squeeze due to the rise in interest rates, saying: “The fallout from higher mortgage rates continues to buffer the rental market. Higher interest rates have encouraged some leveraged landlords to conserve cash and invest beyond bricks and mortar. With the Bank of England raising rates to encourage debt repayment instead of additional borrowing, the 30,000+ fall in the number of outstanding UK buy-to-let mortgages since November shows landlords are playing ball.”
With 68 per cent of the rental growth over the last decade occurring since the outbreak of Covid, the researchers predict that if the current 12.0 per cent annual growth persists, we could see average rents in Great Britain surpassing £2,000 pcm in less than four years.
Do you think rents will keep rising at the current rate?