In the lead-up to the bustling summer season, UK rents have soared to a seven-month high, with the North West of England experiencing the largest annual increase, according to the latest rental index from Goodlord.
Tenants continue to face fierce competition in the rental market, significantly outnumbering the available properties in many regions. This disparity, coupled with landlords raising prices to offset increased mortgage costs, has driven rents higher. Goodlord’s data indicates that the average rental cost rose to £1,183 in May, marking a 1.4% increase from April’s average of £1,166. This figure represents the highest average rent since October of last year when rents peaked at £1,190 per month.
Traditionally a peak period for sales and lettings, this summer may see an intensified market due to improved economic conditions and positive market sentiment since the beginning of the year. This rise might signify the start of a prolonged upswing in rental prices.
Regionally, the West Midlands experienced the most significant monthly rent increase, with a 4% rise since April. Birmingham, in particular, has seen substantial investment and regeneration, attracting a growing population, many of whom are renters.
The North West recorded the second-largest monthly rent increase at 2%, but it leads the nation in annual rental growth. According to Goodlord, rents in England have risen by an average of 6% year-over-year, reflecting the broader inflationary pressures as interest rates have held steady at 5.25% since last summer, forcing many landlords to refinance at higher rates.
The build-to-rent sector and high-end rental offerings in city centres, catering to young professionals, have also contributed to rising rents. These new developments often include amenities such as shared spaces, concierge services, and outdoor areas.
Manchester, akin to Birmingham, has attracted significant investment to accommodate its growing population, with a focus on expanding rental housing. Goodlord reports that the North West saw the highest annual rent growth, with an 8.1% increase over the past year, raising the average rent in the region to £960 from £888 in May 2023.
Void periods, the time a property remains unoccupied between tenancies, show considerable regional variation but have generally increased by 10.5% both monthly and annually, with the average void period in England now at 21 days. Greater London has the fastest-moving rental market, with properties typically vacant for only 18 days, while the West Midlands sees the longest void periods at 25 days.
Notably, the North West is the only region where void periods have decreased year-over-year, from 20 days in May 2023 to 19 days this month, reflecting heightened tenant demand that has driven rent increases.
William Reeve, CEO of Goodlord, remarked, “This month’s data may well have signalled the starting gun on summer price escalations. The coming months are traditionally the busiest season for the rental market and the time when rents peak.”
So far in 2024, year-on-year rent rises have been consistent, hovering around 6-7%. Last summer saw rental averages break the £1,350 per month barrier for the first time. Reeve anticipates, “If this 6-7% year-on-year trend continues, we could be seeing our first £1,400+ rental average being recorded in just a few months’ time.”