Guild of Landlords Rent Digest – September 2020

Fixing a competitive rent can make all the difference to a property business's bottom line. Getting it right and renting a home out can be a breeze, but getting it wrong and a landlord can be saddled with paying for the running costs without any money coming in. 

Although a property’s rent will depend on several factors, like location, living standards and closeness of local amenities, many tenants choose to rent on price. As somewhere to start, here’s a guide to the latest national buy-to-let rental statistics.

ONS Rents – August 2020

Buy-to-let rents are still rising, but the pace of growth has remained the same for most of this year. The latest data from the Office for National Statistics (ONS) shows rents were up 1.5% in the year to August 2020 – a notch up from 1.4% in July. 

That means a home rented out for £500 in August 2019 now costs £507.50p a month. 

The ONS Index of Private Housing Rental Prices says rental growth has gradually slowed across the UK since January 2016, mainly because of a slowdown in London. 

In the year ending August, UK rents excluding London increased 1.6%, a rate that has stayed the same since April. In London, rents are rising slower than in the rest of the country. They increased 1.3% in August, up from 1.1% in July. Between January 2015 and August, rents were up 9.5%. 

During the same period, the Consumer Price Index rose 9.6%.

Rents by country

Tenants in England saw their rents rise 1.5% from 12 months to August, up 0.1% from July. Outside the capital, rent rises across England stayed at 1.7% for the fourth month. 

In Wales, rents were up 1.4% in the year to August, down from 1.6% in the year to July. In Scotland, annual rent costs dropped 0.1%, from 0.6% more in July to 0.5% in August.

Rents by region in England

Landlords in the South West saw rents rise the most in the past year – up 2.5%, but the rate has not changed since May. 

The next most significant increase was in the East Midlands, at 2.4%, again unchanged since July. The lowest rent rise was in the North East, where they grew 1% in the year ending August, up 0.1% from July. 

Rent growth also stayed at 1% in the South East, the same as in July.

Rent statistics from other sources

Several property businesses and other organisations produce their rent statistics. Here is a digest of some of the data:

Homelet Rental Index – August 2020

Tenant referencing firm Homelet reports average monthly rents for a new tenancy in the UK in August hit £985 a month, up 1.5% on a year earlier and 2.1% in a month. That’s a rise of £20 a month over July’s rental figure, which was a 06% annual increase. 

Other takeaways from the report include:

  • Average rents in London dropped 2.1% in the year to £1,653 a month, but still increased year-on-year compared with a 3.2% fall in the 12 months to July, which showed an average monthly rent of £1,611
  • Excluding London, the average UK monthly rent was £825, up 2.9% from the previous year and £17 (2.1%) in a month

Martin Totty, chief executive at HomeLet, said: “Throughout the ongoing Covid-19 pandemic, private landlords must feel that they alone are shouldering much of the burden to support those tenants who have been financially impacted. Property owners are having to dig deep to find the requisite reserves of resilience and resolve to stay the course. 

“The situation has been exacerbated further by the last minute and material amendments to government policy, when landlords have shown the flexibility demanded of them to help their tenants’ bridge their contractual obligations. 

“While there are many stories of constructive dialogue between landlords and tenants on existing tenancy terms, it’s encouraging that rents agreed on new tenancies in August, in every region outside London, are up on the same month last year and, in almost all regions, ahead of where they were only one month previously. London may be experiencing a correction of sorts in supply versus demand and the sharp reversal of price growth from positive 4% pre-Covid to negative 2% now, represents a significant swing. 

“Elsewhere, average monthly rents are edging up on both a monthly basis and on a long-term smoothed trend which removes the month on month fluctuations to provide a clearer trend line over time. Outside the capital, the rental sector still appears to offer sound fundamentals and, for committed landlords able to manage through the current challenges, having access to a wide range of financial protection solutions via professional letting agents, there are some bright spots to add into the mix.”

Homelet Rental Index by region – August 2020

RegionAug-20Aug-19Annual VariationJul-20Monthly Variation
Greater London£1,653£1,689-2.10%£1,6112.60%
South East£1,070£1,0640.60%£1,0343.50%
East Of England£954£9302.60%£9322.40%
South West£899£8525.50%£8762.60%
North West£781£7415.40%£7731.00%
West Midlands£739£7202.60%£7212.50%
Yorkshire & Humberside£678£6553.50%£6701.20%
East Midlands£670£6552.30%£6562.10%
Northern Ireland£668£6640.60%£674-0.90%
North East£546£5312.80%£5352.10%
UK excluding Greater London£825£8022.90%£8082.10%

Source: Homelet HomeLet Rental Index - July 2020

Royal Institution of Chartered Surveyors (RICS)

The RICS UK Residential Market Survey for August 2020 reports high demand from tenants for a dwindling supply of buy-to-let homes. 

In the lettings market, tenant demand continued to rise sharply, while landlord instructions were broadly flat following a modest pick-up in July (non-seasonally adjusted monthly series). 

Rental growth expectations over the near term have strengthened in the past three months, with a net balance of +31% of contributors now anticipating an increase (+22% in July).

Guild of Landlords Rent Digest – FAQ

For landlords confused by the stats and what they mean, here are some answers to the most asked questions about rents.

Why do the rent indices show different results?

Check the data carefully. Different indices cover different periods, and the samples vary between reports. 

The ONS has the most extensive sample, so it should return the most reliable figures, but the time taken to collect and analyse the statistics often means the ONS data lags behind the rest of the sector. 

ARLA derives insights from letting agents and provides what’s known in the trade as a sentiment survey rather than factual data. Homelet and DPS statistics are based on their customer base, which may not fully reflect the market.

Should landlords raise rents in line with the stats?

That’s a business decision for landlords. The rent statistics indicate how the market is moving but do not reflect demand from tenants and property standards in local neighbourhoods. Don’t forget the data is historical, so it gives a picture of what’s happened rather than what will happen.

Which rent index is the best?

That’s up to individual landlords. For instance, one index with a solid customer base in the same area as a landlord’s portfolio may align more closely with market rents for that neighbourhood. Average data is not much good if you don’t have an average home, and median rents will cover everything from a room in a shared house to a four-bedroom home. Extra research with local letting agents will likely give a better view of where a landlord should pitch a competitive rent and stop them from underselling.

How has coronavirus disrupted the statistics?

Although several letting agents and property organisations publish regular rent statistics, many have been affected by the coronavirus lockdown that has their reports suspended or delayed.

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