Rents Rise at Fastest Rates Since 2008

The UK has seen rents rise at their fastest rate since the financial crash of 2008, as tenant demand has doubled, and the supply of homes has fallen far lower than that the demand for them.

While the “race for space” has hugely impacted the market for homes for sales in rural and commuter areas – when it comes to rental demand it appears that City Centres are once again firmly in demand.

With the biggest increase in rents in over 13 years, tenants now pay on average £790 a month, up from an average of £752 the year before, meaning that renters now pay on average an additional £456 more each year.

The competition for tenants to find properties is also driving down void periods, with Zoopla saying that rental homes were letting in just 15 days, the fastest rate since 2016 and more than a week quicker than they were in 2020.

Northern City Centre Rental Rises

The competition for homes in the UK’s city centres soared between July and September, no doubt driven by the return to offices for many as lockdown came to an end. Students returning to university is also thought to be driving the increase in demand. In the central postcodes of Manchester, Leeds and Edinburgh, tenant demand has more than doubled since the start of the year according to the data from the property website, Zoopla.

The highest increase in actual rental prices were seen in Nottingham, Newcastle and Bristol.

This upturn in appetite from rentals has pushed the supply of homes available to rent to 43% below the long-term average, pushing prices up across the board.

Zoopla suggested that the stock of property available across the country was around a third lower than usual, suggesting that the trend of landlords selling up or turning to short-term rentals in London was being mirrored in towns and cities across the country. 

London falling behind – but growth emerging

London’s market has not followed the trend – lowering the average national rent, however, after 15 consecutive months of falls in asking price for rental property, prices have increased by 4.6%.

Zoopla notes that a resurgence in recent months has shown that the average number of agreed tenancies in the Capital during July, August and September were 50% above the five-year average – again potentially reflecting the “return to the office.

Supply in London has fallen by 58% over the past year, meaning that again, as the demand rises, rents are likely to go up. 

What’s driving demand?

A wealth of factors has come together to explode the rental market.

Supply has been seriously constrained by the impact of eviction ban which took place during the pandemic – meaning that even if landlords wished to end tenancies, they could not. While this has now come to an end, it has no doubt, slowed down the number of properties coming onto the market.

Additionally, many landlords have chosen to exit the market in recent years, due to increasing legislation and pressure.

Finally, with movement once again possible and city centres opening, many tenants are getting back to normality and want the benefits of living close to their work, or university and also the city lifestyle.

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