Rents are rising at their fastest rate in seven years
The speed at which rents are rising has increased in recent months – after a slowdown during the pandemic. Private rental prices paid by tenants in the UK increased by 2.7% in year to April 2022, the Office for National Statistics has said, representing the largest annual growth rate since figures began in January 2016.
Propertymark, which is the leading professional body for letting agents, reported a big disparity between supply and demand in its March Private Rented Sector Report. An average member branch reported having just eight properties that were empty and freely available in March, although that was up from five in February.
An average of 93 new applicants were registered per member branch in March, a big jump from 78 in February. Tenants were staying in their rental property longer, at 23 months on average, up from 21.
Commenting on the report, Nathan Emerson, CEO of Propertymark, said: “Our latest report shows that tenants are staying in properties longer. This is in part due to rock bottom levels of stock meaning tenants have very little choice when looking to move. They will also find fierce competition is pushing up prices of what is available often making it unaffordable to move.
“When an increase in tenants staying put for longer occurs, the churn of properties that would normally come back into the market begins to stagnate, feeding the issue further. Agents have been warning of the adverse effects of landlords leaving what they feel to be a hostile market. Property investment, like any form of investment, needs to be financially viable and with adequate risk mitigation. Many landlords feel their rights are being eroded, meaning they are more likely to sell.”
According to the ONS, growth in private rental prices across the UK was broadly flat between November 2019 and the end of 2020. The beginning of 2021 saw a slowdown in rental price growth, which was driven by prices in London, where the cost of renting actually fell in some months in 2021.
This may have been related to a falling population in the capital. The Economic Statistics Centre of Excellence (ESCoE) reported almost 700,000 foreign-born residents may have left the city in 2020 after the start of the pandemic, while property sites like Rightmove reported falling interest in London with more people looking to move elsewhere.
Private rental price growth across the rest of UK remained mostly stable during the early part of 2021 before prices started to rise towards the end of last year and into this one. This growth has continued to increase in recent months, with an increase in rental price growth in London as well since the start of 2022.
Where you live could mean seeing the cost of rent rise faster. While London rent prices rose by 1.1% in the year to April, a jump from 0.4 in March, that was the smallest increase for any region.
The biggest increase was in Northern Ireland, where rents were up 6.5% in the year to March. That was followed by a 4.0% rise in the East Midlands, and 3.7% rises in the East and South West.