Rents Nudge Down but End 2021 on a High
Average asking rents have ploughed through the £1,000 ceiling to reach an average of £1,058 a month - an 8.6 per cent increase in a year, according to November 2021 data.
New tenancy costs have nudged down 0.1 per cent from October 2021 following a similar fall in London, where the average rent is now £1,757 a month, up 11.5 per cent in 12 months.
Excluding London, average rents for the rest of the country are 7.4 per cent higher than a year ago at £889 a month, says data from tenant reference agency Homelet.
“Despite the disruption and uncertainty we’ve all seen this year, we have referenced almost a million tenants, which highlights the considerable level of demand we’re still seeing. People still need and want to move home,” said the firm’s CEO Andy Halstead.
“The UK needs landlords; if demand continues to outstrip supply, then prices can only go up. Typically, we might see a rise in rental prices for desirable or emerging areas, but high demand has been seen for some time now, and that applies to practically every area of the UK. With fewer new properties coming up to rent when compared to pre-pandemic levels, we can expect the trends we see continuing throughout 2022.”
Record numbers of renters seeking homes
Meanwhile, letting agents report a record November as the number of prospective tenants looking for a new home shot up from 71 a branch in October to 82. The highest level was 134 a branch in the East Midlands, while in Wales, the lowest number was 26 new tenants.
Association of Residential Letting Agents (ARLA) CEO Nathan Emerson said:
“Many landlords are aware of how difficult this year has been for tenants, and as a result, we are seeing rent increases fall for the second month in a row. The private rental sector – which makes up a significant amount of the UK housing stock – is facing the reality that many landlords are increasingly considering an exit from the market. A key focus for Governments in the New Year needs to be how to incentivise more landlords to remain in the sector and attract new interest in the market.
“However, looking towards the sector’s immediate challenge as the pandemic rears its head once again, the unfortunate reality is that we may see an increase in the number of renters falling into arrears. It is therefore vital that vulnerable tenants are adequately supported during this time.”
Rent changes by region - November 2020 until November 2021
Data from the Office for National Statistics (ONS) shows rents increased 1.7 per cent in the year to November - the highest rate since July 2017. The highest annual rent increases were in the East Midlands and South-West, up 3.1 per cent. The capital, where rents were down 0.1 per cent, is the only region with rents in the red.
The table shows average rents throughout the UK for November 2021:
|Yorkshire & Humberside
|East of England
|UK excluding London
Guild of Landlords Rent Digest – FAQ
For landlords confused by the stats and what they mean, here are 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 the most reliable figures should return, but the time 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 statistics come from customer data, 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 moves but do not reflect demand from tenants and property standards in local neighbourhoods. Don't forget that the data is historical, showing 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 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 is likely to indicate better 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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Investing in a private rented property can be achieved in a variety of ways. Sometimes landlords inherit a property that they then turn over to renting. Sometimes owners of properties become unintentional landlords because they are unable or unwilling to sell a property at the value the market currently dictates.