Great Britain’s rental market has witnessed record-high average rents, particularly in London. Soaring prices and regional variations continue to strain tenant affordability despite a slowing pace of growth. Here’s the full story.
Bad News for Renters
In yet more bad news for the millions of people forced to rent in the UK due to a chronic housing shortage, affordable or otherwise, the rental market has hit unprecedented highs.
Record Highs
Landlords will be rubbing their hands with glee at this week’s announcement that average rents have soared to record highs both in and outside London.
8.5% Increase
According to data from the property website Rightmove, the average advertised rent outside London surged to £1,291 for the first quarter of 2024, an astonishing 8.5% increase from the previous year.
5.3% Rise
Meanwhile, in London, which has long been infamous for prices considerably higher than the rest of the country, typical rent reached a staggering £2,633, a 5.3% rise compared to last year.
Skyrocketing Prices
Behind these headline figures, there are significant regional variations. Certain areas have seen rental prices skyrocket at rates far exceeding the national average.
34.6% Rent Increase
Walton-on-Thames in Surrey boasted an eye-watering annual rent growth rate of 34.6%, while Coventry and Reading experienced growth rates of 19.5% and 19.1%, respectively.
17 to 19%
Other areas, including Bootle, Hertford, Southampton, Watford, and Paisley, also reported substantial growth between 17% and 19%.
Finally Slowing
However, despite the near continuous rise in average rents, there are some signs that the pace of growth is finally beginning to slow.
“Severely Tested”
The data from Rightmove suggests that while rents for new properties hitting the market are still reaching record highs, the overall rate of rent growth is slowing down as tenants’ ability to afford ever-increasing rents becomes “severely tested.”
Cost of Living Crisis
Tenant affordability is under strain, which is no surprise considering the ongoing cost-of-living crisis, slow wage growth, and inflation still well above the Bank of England’s target of 2%.
Supply vs Demand
This continued squeeze on living standards is finally affecting landlords, who until recently were content to raise prices, safe in the knowledge that supply would never keep up with demand.
Reducing Rents
A growing number of landlords are now being forced to reduce the initially advertised rents to meet the stagnant wages of their local markets.
Larger Properties
This trend is particularly noteworthy among larger properties, such as four-bedroom detached houses and those with five or more bedrooms, where almost a third (30%) are experiencing rent reductions.
50,000 More Needed
The leading cause of rising rents is the persistent imbalance between supply and demand. The rental market still grapples with a significant shortfall in supply and nearly 50,000 more rental properties are needed to restore levels to those seen before the pandemic.
26% Shortfall
While available rental properties have increased by 11% compared to last year, they remain 26% below 2019 levels.
Few Looking To Sell
Simon Thompson of Miles & Barr stated, “The pace of new supply coming onto the market is probably due to a combination of the relatively low numbers of new landlords coming into the market and a few landlords looking to sell.”
54% Higher
The number of prospective tenants searching for rental properties has decreased by 17% compared to the previous year but remains 54% higher than pre-pandemic levels in 2019.
Barrage of Enquiries
Additionally, letting agents are facing a barrage of enquiries, receiving an average of 13 per rental property, allowing landlords to ask for more from tenants desperate to find a place to live.
“Very Hot Simmer”
Tim Bannister, Director of Property Science at Rightmove, stated, “The rental market is no longer at peak boiling point, but it remains at a very hot simmer. Looking at data across the whole market, we can see some slow improvements for tenants, with more choice, and competition with other tenants slowly starting to ease.”
Unimaginably Unaffordable
Though the rental market shows promising signs of cooling off from its peak, it remains almost unimaginably unaffordable for many.
30% of Salary
With the average salary in the UK outside of London sitting at £34,963, average rents of £1,291 would mean that tenants are spending nearly 30% of their income on rent, bearing in mind that many in the UK who are forced to rent make considerably less than the average income.
No Sign of Stopping
Unless the persistent supply-demand imbalance for housing is addressed, rents are unlikely to go down anytime soon.
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The post Rental Market Misery: UK Rent Prices Reach Record Highs first appeared on Edge Media.
Featured Image Credit: Shutterstock / I Wei Huang.
Grant Gallacher is a seasoned writer with expertise in politics and impactful daily news. His work, deeply rooted in addressing issues that resonate with a wide audience, showcases an unwavering commitment to bringing forth the stories that matter. He is also known for satirical writing and stand up comedy.