Monthly rent breaches £1,200 – a record share of income
At almost 20%, there’s been more rental growth since the beginning of the Covid-19 pandemic than in the eight years prior, analysis by estate agency Hamptons found.
This equates to an additional £2,351 a year in rent.
The average privately rented household in Britain now spends 44% of their post-tax income on rent, up from 41.6% in October 2020 and 39.2% 10 years ago.
Rents in five regions have nudged into the next £100 price band this year, with costs in Greater London passing £2,100 for the first time in October.
In the capital, the average rent takes up 62% of the average renting household’s post-tax income.
The pressure on renters has stabilised in recent months with growth falling from 11.5% annually in May to 7.1% in October.
It comes as supply increased for the second month with 15% more homes available in October than at the same point last year.
However, there are still 47% fewer homes available than two years ago.
‘Cost-of-living squeeze for tenants’
Aneisha Beveridge, head of research at Hamptons, said: “Strong rental growth has pushed average rents into another £100 price bracket for the third time in just over two years.
“However, the good news for tenants is that rental growth has slowed from its summer double-digit peak and looks likely to settle around the 5-6% mark by the end of the year.
“This will be welcome news for many households who are seeing other costs spiral as inflation peaks. And it also means that, unlike at the beginning of the year, rents are more closely tracking income growth which should soften the cost-of-living squeeze for tenants.”
She added that “while risks are mounting for future house price growth”, these same risks are likely to bolster rental growth in the short-term.
“High mortgage rates will keep more would-be buyers in the rental market for longer, which is partly why demand is up 5% on last year’s record levels” she said.
Beveridge added: “Landlords’ costs are also rising, which they’ll likely seek to pass onto tenants in the form of higher rents or sell up if they are unable to cover costs.
“This is why we think rents are still likely to rise 5% in 2023.”