No sign of seasonal dip as rents rise in October
Average UK rents climbed 0.7 per cent month-on-month in October to £1,294, according to the monthly Landbay Rental Index.
The UK rental market is commonly hit by “seasonal slowdown” in the autumn, as summer demand from students, and tenants whose contracts have expired reduces significantly.
However, no slowdown was evident this year, as rents climbed month-on-month and year-on-year and across the UK in October, with the only exception being Scotland, which saw a marginal monthly fall of 0.1 per cent to £696.
Landbay attributes this convention-busting rise to a combination of wage growth and unemployment reaching its lowest level since 2008. The last time there was a sustained period of falling rents in the UK was the winter of 2012/3, when rents saw monthly falls from August 2012 to April 2013.
Rents increased every month in 2014, and have been strong this year, seeing only small month on month decreases between June and August before increasing again in September and October.
The chart below illustrates UK rent growth from January 2012 to October 2015.
October’s rent increases were fastest for three bed properties, rented by families moving for work (up 4.7 per cent year-on-year), and one beds popular with first jobbers and young professionals (up 4.4 per cent).
Increases in the UK are being driven by London and the southeast. In October, London rents increased by 4.1 per cent to an average of £2,063, whilst rents in the southeast rose by 3.4 per cent to £1,033.
The impact of London on the national private rental sector is becoming increasingly evident by the surge in rents among commuter hotspots. Southend on Sea, historically not well-known for its commuter town status, has seen consistently faster growth in rents than the national average. The seaside town’s one hour direct train into London and recent gentrification have played their parts in an annual rental increase of 9.7 per cent, to an average of £759 per calendar month.
Out of the top twenty areas of the UK outside of London to see the fastest rent increases, just Aberdeen, Edinburgh and Bath were outside the southeast.
John Goodall, co-founder and CEO of Landbay, said: “Seasonality has always been a strong feature of the UK’s rental market so the fact that it appears to be declining in influence is a powerful sign of the increasing strain the private rental sector is under. The simple fact is more people are renting for longer and there aren’t enough properties to meet demand.
“In previous years, price-conscious tenants could take advantage of the seasonal dip in rents to find cheaper rents in the autumn or winter. Consistent rent rises throughout the year have taken away that option in large parts of the country.
“The almost uninterrupted monthly rental increases we have seen since spring 2013 show that residential property is a resilient asset class that has performed exceptionally well during a period of low inflation.”