August saw UK rents continue their relentless climb, reaching an average of £1,438 for new tenancies, according to the latest data from Goodlord. This marks the second consecutive month that the average rent has surpassed the £1,400 mark.
Goodlord’s figures indicate that while the August average was slightly below July’s all-time high of £1,470, it still represents a significant 7% increase compared to the same period last year. This surge is causing growing concerns about affordability, with the company warning that the rental market may be approaching a critical threshold that could exacerbate the housing crisis.
Regional Disparities and Rising Costs
Tenants in the South West have been hit hardest, with rents in the region soaring by 13% year-on-year. Other regions, such as the East Midlands and North East, also saw substantial increases, with rents up by more than 9%. In contrast, the West Midlands and Greater London experienced more modest growth, with rent rises of just 2-3%.
Despite a slight national decline in rents from July’s peak—down by 2% in August—regional variations were evident. Notably, the North East, North West, and South West experienced reductions in average rents, while other areas continued to face escalating costs.
Affordability Crisis Looms
Goodlord’s chief executive, William Reeve, cautioned that the recent trends mirror patterns observed in 2023, with a sharp increase in July followed by a slight dip in August, yet overall rent levels remain historically high. Reeve emphasized the growing disconnect between rent hikes and wage growth, noting that while rents have jumped by 7% year-on-year, salaries have only increased by 1%.
“This widening gap is putting immense pressure on tenants,” Reeve said. “With interest rates starting to drop but incomes failing to keep pace with rising rents, we may soon hit a sustainability ceiling. If rents continue to escalate, they will become unaffordable for many, potentially triggering a new phase in the housing crunch.”
Voids and Salaries
Void periods, the time a property remains empty between tenants, lengthened across most regions in August, increasing from 11 days in July to 15 days. This is slightly higher than the void periods recorded in August 2023. Greater London was a notable exception, where void periods decreased slightly.
Additionally, tenant salaries dipped by 3.6% in August compared to July, and although there has been a modest year-over-year salary increase of 0.86%, it has not kept up with the steep rise in rents, further squeezing tenants’ budgets.
As the rental market continues to evolve, the balance between rent levels and tenant affordability remains a pressing issue, with the potential to reshape the housing landscape in the coming months.