Decade-high growth pushes average rent past £1,300 for the first time
The Hamptons Lettings Index recorded a 12% yearly rise in the average rent of a newly-let property and said this was the fifth month ever recorded where annual rent growth was in the double digits.
The other four rates of double-digit growth have occurred in the last year. August’s growth also exceeded the previous record 11.5% annual jump which was noted in May last year.
Hamptons said renters were now paying an additional £140 per month on rent on average.
It has been 11 months since the average rent passed £1,200 for the first time and 37 months since it went above £1,000 a month for the first time.
The firm said while unlikely, if average rents were to continue rising at the current rate, it would take less than four years for the average monthly rent to exceed £2,000.
If rents rise at the pre-Covid average of 2%, it will take 29 years to reach this point.
Hamptons said the upward pressure on rental growth could start to soften as more available properties sat on the market for longer. There were 30% more available properties to rent in August when compared to last year.
However, rental stock is 39% down on 2019 levels which could continue to prop up rental price growth.
The average rent on newly-let properties in Scotland rose by a record 13.4% since last year, which was the largest increase in over a decade. This has put the average rent in Scotland higher than the Midlands for the first time at £935 a month compared to £922.
The strongest rate of growth was recorded in outer London where the monthly rent surged by 18.1% to £2,191.
Aneisha Beveridge, head of research at Hamptons, said: “Each passing month has ushered in a new rental market record. Rents have risen more in the last 12 months than they did between 2015 and 2019.
“While the current pace of rental growth is unsustainable long term, many mortgaged landlords are being squeezed just as tightly as tenants. Higher rents are only going some way towards helping mortgaged landlords balance their books, rather than boosting their profit. This is one of the reasons we haven’t seen large numbers of new landlords come into the market.”
She added: “The fallout from higher mortgage rates continues to buffer the rental market. Higher interest rates have encouraged some leveraged landlords to conserve cash and invest beyond bricks and mortar.
“With the Bank of England raising rates to encourage debt repayment instead of additional borrowing, the 30,000+ fall in the number of outstanding UK buy-to-let mortgages since November shows landlords are playing ball. However, it’s a mixed blessing for tenants. With most mortgages repaid by the sale of the home, renters are being short-changed. And this is adding fuel to the rental market.”