The latest HomeLet Rental Index has revealed what the average rents were across the UK and how much they’ve increased. What’s behind this rise in the rental market?
Last month, the average UK rental price for a new tenancy came in at £1,029 per month. This is a record high and the second month in a row where the average rent surpassed £1,000. Additionally, the figure for the month of July is 2.2% higher than the previous month.
In the 12 months to July, the average rent has increased by 6.6% from £965. Excluding London, the annual increase in rent is even higher at 8.7%.
Recent reports have shown that tenant demand is continuing to surge in the UK rental market. And new supply still remains limited. This shows the strong need for more properties in the private rented sector.
Andy Halstead, chief executive at HomeLet and Let Alliance, says: “The private rented sector is exceptionally resilient, and demand for property remains high. We’re seeing some of the needs across the country being met by the fast-growing Build-to-Rent sector.
“That’s a theme that will continue for the foreseeable future, as tenants look to benefit from the lifestyle the industry can provide with features like on-site amenities and concierge services.”
All home nations and regions across the UK recorded annual rent increases from July 2020 to July 2021. Topping the list, the south-west of England saw rents increase by 12.9% annually. Wales followed with an 11.8% rise. And the East Midlands recorded 10.8% growth.
After a year of rent decreases in London, the capital has seen its second price rise in as many months. There has been an annual increase of 2.1% to £1,645 per month. Rental prices also increased by 2.4% monthly. London is second to only the south-west in month-to-month growth, which recorded a 4.3% rise between June and July.
“The data shows the exceptional growth in rental values, particularly in areas that are within commutable distance to London,” Andy Halstead comments. “Throughout the pandemic, the rate of growth in some regions has more than doubled against previous years.”
Spotlight on the north-west
Each month, HomeLet provides a snapshot of tenant profiles across different UK regions based on data from the past year. This month’s focus is on the north-west, which is home to a growing rental market.
The average percent of income tenants spend on rent in the UK is 29.8%. In the north-west, the average tenant spends 28% on rent. Additionally, the median tenant gross income of tenants there is £23,782, and the predominate rental band is between £500 and £750 per month.
In the north-west the predominant age group of tenants is between 20 and 29 years old. Throughout the past 12 months, 54% of tenants in the north-west were under the age of 29. This further highlights the north-west as a thriving location for young professionals and shows the need for more rental properties to cater to what modern tenants are looking for.
The region has seen significant investment in recent years, which is set to continue after the government has committed more money to the area. This could further make the north-west a great area to invest in with strong rental yields and capital growth prospects.