Rents increase at fastest ever rate as tenant competition doubles
- Average asking rents have increased at the fastest rate on record, and are now £1,068 per calendar month (pcm) outside of London – 9.9% higher than this time last year
- Average rental growth is outpacing house price growth in all but three regions (East Midlands, South West & South East)
- London rents hit a new record of £2,142 pcm, seeing the largest quarterly jump of any region (+6.1%):
- Rents in the capital have risen beyond pre-pandemic levels for the first time, and are now 3% higher than the beginning of 2020
- Rightmove predicts asking rents will rise by 5% in 2022 as imbalance between supply and demand continues:
- Competition between tenants for available properties is nearly double (+94%) compared to this time last year
- Tenant demand is 32% higher than this time last year
- The number of available properties is 51% lower than the same period last year, however it is 7% higher than the same period in December, a sign of availability improving
- New Rightmove data on rental yields reveals the average yield in Great Britain is at its highest point since 2016, with record yields in the North East and Wales
Rightmove’s Quarterly Rental Trends Tracker reveals that asking rents in Great Britain are rising at the fastest rate ever recorded.
Average asking rents hit annual growth of 9.9% to reach £1,068 per calendar month (pcm) outside of London, the highest annual jump on record, recovering from the slowdown in rental growth in the months immediately after the pandemic started.
This rapid growth in average asking rents, driven by high tenant demand and low numbers of rental properties available, means that rising rents are outpacing house price increases in all but three regions (East Midlands, South West & South East).
Wales (+12.7%), the North West (+12.5%) and the South West (+11%) lead the way in annual asking rent growth, while London hit record annual growth of 10.9%, with asking rents in the capital now 3% higher than before the pandemic started – the first time they have risen beyond pre-pandemic levels.
Pontypool in Monmouthshire, Wales saw the largest annual increase in asking rent of any local area, jumping 20% from £562 pcm to £674 pcm, followed by Ascot (+18.8%), and Littlehampton (+17.5%).
London completes its recovery
At the end of 2020, London recorded a near-record 6.4% drop in average asking rents, as demand shifted away from the capital during another lockdown. Tenants looked for more space outside of cities, flats temporarily fell out favour, and landlords offered tenants willing to stay cut-price rents.
By the end of 2021, London rents are higher than before the pandemic started, as its popularity returned and landlords were able to negotiate higher rents for the new year.
Inner London rents also grew at a record 16.2%, recovering from its drop of 14% at the beginning of 2021, to also rise just ahead of pre-pandemic levels for the first time.
The squeeze on available rental homes
The imbalance between high tenant demand and low rental stock is supporting asking rent rises and has led to competition between tenants for the rental properties available nearly doubling (+94%) compared to the same period last year.
Total rental demand is up by 32% compared to this time last year, while the number of available rental properties is 51% lower. This has led to available rental properties being snapped up by tenants in just over two weeks (17 days) on average.
However, the number of available rental properties is 7% higher than the same period in December, a sign of availability improving at the start of the year.
Flats have seen the highest increase in competition compared to last year (+132%), followed by terraced houses (+40%) and semi-detached homes (+30%).
Landlord yields
Newly published rental yield from Rightmove reveals that the average yield across Great Britain is 5.5%, which is the highest yield since 2016 when it was 5.6%. The North East & Wales have hit record yields, while yields in London, South West and Yorkshire are at their highest since 2015. Yields in the East of England and South East are at their highest since 2016.
Rightmove’s Director of Property Data Tim Bannister said: “2020 was defined by the race for space outside of cities, as tenant priorities changed and many moved further out looking for a larger property with green space, or temporarily moved back in with family. London was perhaps the biggest example of this, where landlords significantly decreased asking rents by the end of the year to encourage tenants to stay in the capital. A year on, asking rents have finally risen beyond pre-pandemic levels, a sign that the capital has not lost its pull and popularity with renters as landlords look to renegotiate previous cut-price terms.
“Tenant demand continues to be really high entering the new year, meaning the imbalance between supply and demand is set to continue until more choice comes onto the market for tenants, which has led to our prediction of a further 5% increase in average asking rents in 2022. Landlords understand the importance of having a good, long-term tenant, and there is a limit to what renters can afford to pay, which will prevent rents rising at the same rate we’ve seen over the past year.”
Marc von Grundherr, Director of Benham and Reeves, said: “The London rental market is drastically different to that seen in 2020 when landlords were forced to heavily reduce asking rents to secure a tenant and avoid lengthy void periods due to an exodus of market activity from the capital.
“In fact, the surplus of available rental stock that accumulated due to the pandemic has now plummeted and this has been driven by a staggered return to the workplace and, in particular, a huge influx of demand from overseas students.
“We’ve also seen a huge increase in the number of tenancy renewals which have even exceeded 2019 levels and so while some areas are yet to see rental values return to the pre-pandemic norm, it’s only a matter of time as the market looks set to continue to this strong return to form throughout 2022.”
Tenant tips – How to secure a rental home in a busy market
- Use Rightmove’s Instant Alerts to get instant, daily or weekly email updates about new available rental properties that have come to market
- Book a viewing as soon as possible when a property you’d like to rent becomes available, giving you the best chance of seeing it first
- Demonstrate to the landlord or letting agent that you will be a good tenant for the home, such as making sure to be on time for a viewing. Landlords understand the value of a good tenant, and want someone who can be reliable and will treat the home well
- Be prepared, and make sure to have all documents and details ready in advance so that you can move quickly
- Have your finances in order for the initial monies due, and where possible, be flexible with things like move in date to make your offer even more appealing
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Weekly News Roundup – 26/04/24
