In a sign of the ongoing impact of the pandemic on the rental market, average asking rents for new tenants outside of London have surged to a new record, reaching £1,231 per calendar month (pcm), according to the latest figures.
The data reveals that the average asking rent for a typical home in regions outside London has skyrocketed by 33% compared to pre-pandemic levels in 2019, increasing by over £300 from £923pcm. This rapid surge in asking rents outside the capital underscores the mounting demand from tenants and the limited availability of rental properties since the onset of the pandemic.
In contrast, between 2015 and 2019, average asking rents outside London saw a much milder increase of just £71 (8%), highlighting the unprecedented rate at which rental costs have escalated in recent years.
Although the pace of rent increases for new tenants has slightly slowed on an annual basis, it still remains close to double-digit levels. This indicates that while there may be some moderation in the growth rate, the rental market is far from stabilizing.
The scenario is mirrored in London, where average asking rents have also reached a new record high of £2,567 pcm. Despite a slight deceleration in the pace of rent growth, the figures show that rents in the capital have surged by 28% (+£559 pcm) since 2019.
Despite the steep rise in rental prices, properties are letting at a swift pace, with many landlords experiencing long queues of prospective tenants eager to view and secure rental agreements.
The average time to find a tenant for a rental home has dropped to 17 days, the shortest duration since November 2022.
Tenant demand remains exceptionally high, surpassing even the frenetic levels of the previous year, with a 3% increase compared to the same period in 2022 and a staggering 42% rise compared to June 2019.
Though the supply-demand gap has slightly narrowed compared to last year, with available rental properties increasing by 7% compared to June 2022, it still lags behind 2019 figures by a significant 42%.
Landlords are grappling with a myriad of challenges, as revealed by a recent study by Rightmove. The government’s sentiment towards the industry (47%), rising taxation (41%), and increasing compliance requirements (33%) top the list of landlords’ concerns.
Additionally, a quarter of landlords (25%) are worried about the rising cost of buy-to-let mortgages, leading some to make the decision to sell their properties. Currently, 16% of properties listed for sale were previously available for rent, a figure that has risen from 13% in January 2019.
The data also suggests that landlords are particularly concerned about properties with lower Energy Performance Certificate (EPC) ratings, ahead of anticipated changes to EPC requirements by the government. A third of landlords (33%) who own properties with lower EPC ratings plan to sell them rather than invest in improvements, compared to 20% who planned to sell last year.
Despite these challenges, landlords recognize the value of retaining good tenants in their properties and are keen on fostering long-term relationships. A significant majority (57%) of landlords reported that tenants typically choose to stay in their rental properties for more than 24 months, with only 8% reporting lease durations of a year or less.
Rightmove’s Tim Bannister commented on the data, stating, “The number of available properties to rent continues to improve compared to last year’s record low levels, providing tenants with more choice. However, there will continue to be more tenants looking to move than available properties for them to move to for a while yet. The significant increase in demand for rental properties is driven by factors such as changed housing needs, including the need for space to work from home.”
As the rental market navigates these complex dynamics, landlords will have to adapt to evolving challenges while recognizing the importance of fostering strong, long-term relationships with reliable tenants.