Landlords who have seen falling rents across London may be in for a reversal of fortune.
A new survey of the five-year cost of renting 900,000 homes covering every London suburb shows rents have dropped in two out of three neighbourhoods.
The main reason is workers are no longer turning up every day at city centre offices, so they have opted to move out to cheaper areas with larger properties so they can work from home, says the report from property portal Rightmove.
The area with the largest fall in rents is Finsbury, on the edge of the City financial centre. Average rents are £2,147 a month, which is £670 a month cheaper than five years ago, when tenants paid £2,818 a month.
While rents have gone down, the amount of available homes to rent has increased by 76% compared to a year ago.
For landlords, the good news is letting agents expect to see rents rise soon.
Richard Davies, head of lettings at Chestertons said: “Prices are the lowest we have seen for several years and represent incredibly good value for those tenants thinking beyond lockdown and looking to lock-in to a good deal. As the country starts to open again, we expect growing numbers of tenants to return to the more central areas and anticipate that rents will quickly start to recover.”
Outside London, rents are buoyant due to a surge in demand and few homes on the market, says the report.
- 1 Rent rises hit a plateau, says official data
- 2 Rent increases by country – March 2012 to March 2021
- 3 Tenants paying an average £922 a month
- 4 Guild of Landlords Rent Digest – FAQ
Rent rises hit a plateau, says official data
The official rent tracker from the Office for National Statistics (ONS) says rents were up 1.3% in the year to March 31, down from 1.4% in February.
The ONS Index of Private Housing Rental Prices has shown a consistent monthly average rise of 1.4% since January 2020, with only a nudge of 0.1% either way in a few months.
Landlords in Wales are enjoying rents rising the fastest – 1.5% in the past year, compared to 1.3% in England and 1.0% in Scotland.
Rents excluding London grew by 1.7% year on year, while in the capital, tenants are paying just 0.5% more.
UK average rents have increased by 10.2% since January 2015, when the ONS started to record data.
Rent increases by country – March 2012 to March 2021
Rents by region in England
Landlords in the South West are seeing the fastest rental growth, with average rents up 2.4% in the year to March – a 0.1% increase on February.
The worst regional performer was London, where rents were up just 0.5%, followed by the South East at 1.2%, says the March ONS Private Housing Rental Price Index
Rent increases in England – year to March 2021
Check median rents for your local authority for different property types with this interactive map.
Tenants paying an average £922 a month
The average UK buy to let rent is £922 a month, according to tenant referencing agency Homelet.
The figure is a gain of 0.8% on the month before and an increase of 3.4% compared to March last year.
The agency says rents in London fell 5.2% – dropping for 10 months in a row.
The South West was the region with the highest yearly rent rise – up 8% since March 2020.
Chief executive Andy Halstead is forecasting record rent rises later in the year.
“Property professionals know that the private rented sector works best when there’s balance. Ultimately landlords want good tenants, and tenants want a quality property at an affordable price,” he said.
“With almost one in five people living in the private rented sector, it’s fitting that the government should focus on it, with an informed policy that strives to achieve a balance between letting agents, landlord and their tenants, but unfortunately that isn’t the case now. The continued increase in rents above the rate of inflation is a symptom of current policy.
“Property is a long-term investment, and the narrative that landlords and letting agents are driving up rental costs simply isn’t true.
“As demand increases, the UK needs more rental stock for tenants, not less and without policy informed fully by property professionals, rents will rocket to record levels this summer.”
Homelet – Average rents by region for March 2021
|Region||Mar-21||Mar-20||Yearly change||Feb-21||Monthly change|
|East Of England||£987||£924||6.80%||£978||0.90%|
|Yorkshire & Humberside||£688||£646||6.50%||£680||1.20%|
|The UK excluding Greater London||£847||£793||6.80%||£840||0.80%|
Guild of Landlords Rent Digest – FAQ
For landlords confused by the stats and what they mean, here are some answers to the most asked questions about rents.
Why do the rent indices show different results?
Check the data carefully. Different indices cover different periods, and the samples vary between reports.
The ONS has the biggest sample, so should return the most reliable figures, but the time taken to collect and analyse the statistics often means the ONS data lags 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 solid data.
Homelet statistics are based on 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 are an indication of how the market is moving but do not reflect demand from tenants and property standards in local neighbourhoods.
Don’t forget the data is historical, so gives a picture of what’s happened rather than what will happen.
Which rent index is the best?
That’s up to individual landlords. One index with a strong customer base in the same area as a landlord’s portfolio may align more closely with market rents for that neighbourhood, for instance.
Average data is not much 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 give a better view of where a landlord should pitch a competitive rent and stop them from underselling.
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.