Thanks to rising demand across the UK, the average cost of renting a home is nearly £1,000 per month. Plus, rents in London are on the rise as the capital shows strong signs of recovery from the pandemic.
Despite the increase in cost, rents in London account for an average of 37% of a single earner’s wage before taxes, which is roughly in line with the 10-year average of 36%.
London rents are soaring, with the average monthly rent jumping 10.9% in the past year, bringing the average price up to £2,142 PCM. ***
Red hot demand, fueled by the economy’s reopening following the lifting of COVID restrictions last summer, combined with a lack of new properties available on the market, has pushed London rents to skyrocket.
According to recent data from Rightmove, the highest rises were in inner London, where prices rose 16.2% year on year. ***
What’s Happening to Rents?
In the final quarter of 2021, the rate of rent increases hit a 13-year high of 8.3%, according to Zoopla. *
The average annual rent for people signing a lease is now £744 more than it was before the COVID outbreak. Despite this, rents are 12% higher than they were five years ago, even though they fell at the beginning of the pandemic. *
Rents have grown in every region of the UK over the last year, with London having the highest increase of 10.3%, while Scotland saw the lower increase of 4.3%. This is showing encouraging signs of a fruitful rental market in 2022, making it the ideal time for landlords to think about growing their property portfolio.
Demand for Rental Homes is Increasing
The number of people looking for rental homes has increased 76% since the start of the year, compared to the same period between 2018 and 2021. People are beginning to return to the centres of big cities such as London, Manchester, Birmingham, Leeds, and Edinburgh after the pandemic sparked higher demand in larger commuter zones as the race for space continues. *
London’s rental market is set to become more competitive this year with a 25% increase in tenant enquiries. As 2021 progressed, the market saw a gradual return of corporate renters, international students, and professionals considering a partial return to the office, increasing the need for a property closer to central London. This demand has extended into 2022 and is expected to remain robust throughout the year. **
Supply is Low
The increasing demand within the rental market is not being met by an increase in supply. In fact, the number of available rental properties in January was 39% lower than usual for this time of year. According to the latest market report from Zoopla, the mismatch between supply and demand is resulting in a fast-paced rental market with fierce competition, driving up rental costs.
Meanwhile, rental homes are being snapped up in a record 14 days, which is down from the 2020 average of three weeks. A drop in investment from buy-to-let landlords has prompted this drive, and right now there is a huge demand for new rental properties.
Rising costs are also making many renters stay at home, which is limiting the number of rental homes that are available.
So, What Could This Mean for You?
For tenants, the rental market is moving quickly, with fierce competition from other would-be renters. As a result, you should be ready to act quickly to get a property, especially if you are looking to live in a city centre, where demand has increased. You can ask our local agents for the most up-to-date information about the rental market in your area.
For landlords, the increasing demand for rental housing, along with the scarcity of available homes, means that rental property is in high demand, and landlords are unlikely to have void periods. Average yields for new entrants to the market are currently sitting at 4.86% across the UK, according to Zoopla. *
This is a great time to build your lettings portfolio to see the biggest return on your investment.
Looking to take advantage of the soaring rental market? Contact our local agents for more advice.
*According to a recent market report from Zoopla
** According to Property Reporter
*** According to Rightmove’s latest data