Rightmove published their latest quarterly dataset of UK rental activity today for the period 1st April – 30th June 2022 indicating rents have grown at the fastest annual rate in 16 years. Their data was taken from 332,460 asking rents of properties listed on their portal between 1st April and 30th June. The key take away points from the report are: –
- National average asking rents outside London hit another new record of £1,126 per calendar month (pcm), rising 3.5% from last quarter and 11.8% higher than last year
- Average asking rents outside London have now jumped by 19% (+£177) in the two years since the pandemic started, the same growth in rents that took eight years pre-pandemic to reach
- This quarter’s 3.5% jump in asking rents is the second highest in ten years. Average monthly rental payments are now 40% higher than they were ten years ago, while average mortgage payments for the same properties are up 13%
- The number of new rental properties coming to market is up 8% in June compared to the start of the year, rental demand is up 6% compared with last year and available properties are down 26% compared to last year
- Despite improving stock levels rising rents continue to be driven by a shortage of available rental stock, with low volumes struggling to meet high tenant demand over the past two years
- Rightmove now forecast average asking rent growth to reach 8% by the end of the year, up from 5% predicted at the start of the year
- In the Southeast, the average rent is £1611 per month, with quarter on quarter up 5%, and year on year up by 12.1%
- In the Southeast, the average landlord yield is up 5.3% representing a 0.3% annual change but remaining lower than many other parts of the country
- Manchester takes the highest average asking rent price pcm with a 23.4% annual change
Rightmove’s Director of Property Science Tim Bannister said: “The story of the rental market continues to be one of high tenant demand but not enough available homes to meet that demand. Last year we saw exceptional numbers of tenants looking to move and this year we have seen no let-up in this trend. Whilst stock levels are beginning to improve, with June seeing the highest number of new rental listings coming to market so far this year, the wide gap that has been created between supply and demand over the last two years will take time to narrow. Until then, this imbalance will continue to support asking rent growth. This has led to our revised forecast of a 8% rise in asking rents by the end of the year up from 5%.”
Our lettings department is certainly seeing continued demand and lower stock levels than expected at this time of year, however, stock levels continue to increase. One contributing factor affecting stock levels is tenants staying longer in their current rental properties. Even if their Landlords apply a mid-tenancy rental increase it can often work out less than the cost of moving and their new rent.
Mid tenancy rental increases and the details of when this can happen and how much by is usually outlined in the tenancy agreement. Most Assured Shorthold tenancy agreements (the most common type in the private rental sector) have a rent increase clause permitting an increase every 12 months in line with the Retail Price Index (RPI), or in line with RPI or market rent whichever is the greater.
The current RPI is 11.7% (with the next release due on the 20th July), the highest level since October 1981. However, just because a Landlord can increase the rent (where the contract permits) this does not mean a Landlord will. Many Landlords remain cautious, despite their own increasing costs e.g. building insurance, repair and maintenance, materials, mortgage repayments, and their oven living costs, in many cases we are seeing Landlords keep the rent the same, preferring to keep good tenants and rent arrears and affordability issues to a minimum. Where increases are being applied open discussions are taking place first to reach a reasonable and fair agreement that reflects each parties circumstances rather than just going inline with the RPI and market rent spikes.
If you are an AB Landlord or Tenant with any queries or concerns over rent prices, rent arrears, or rent increases please do contact Head of Lettings Rachel Norris on 01892 525 522 or by email rachel.norris@alexandre-boyes.co.uk
As with all our blogs, they are intended as a useful guide only and are not exhaustive. Posted 14/7/2022
