DPS report record rent increases

DPS report record rent increases

11:30 AM, 27th July 2022, About 2 weeks ago 9

Text Size

The DPS has reported average rents rose £66 from £804 to £870 (8.21%) between Q2 2021 and Q2 2022.  The organisation added that four of the largest recorded quarterly rent increases since 2007, including 1.74% in Q3 2021 and 1.96% in Q4 2021, took place during the same period, significantly contributing towards the UK’s rent inflation rate during the past year.

Matt Trevett, Managing Director at The DPS, said: “The last 12 months of rent increases, including a significant acceleration during the last quarter, shows that the price of renting forms a substantial part in rising living costs across the country.

“A mixture of tenants moving back into cities, continued desire for larger rental properties with more space and a current shortage of properties of all types is causing rent prices to rise.

“Despite the current economic environment, many tenants still seem prepared to pay in order to secure a rental property.”

Quarter UK average rent  Rent rise % UK Inflation rate %
Q2 2021 £804 0.50% 2.10%
Q3 2021 £818 1.74% 2.80%
Q4 2021 £834 1.96% 4.65%
Q1 2022 £849 1.80% 6.20%
Q2 2022 £870 2.47% 9.40%

The DPS said that eight of the UK’s 12 regions experienced rent rises of more than 7% between Q2 2021 and Q2 2022.

The North East, traditionally one of the cheapest places to rent in the UK, saw the highest annual percentage rent increase; rising 10.75% (£57) from £530 to £587 between Q2 2021 and Q2 2022, said the organisation.

The DPS added that the West Midlands saw the second highest annual regional rent percentage increase: 10.70% (£69), taking rents from £645 to £714 during the same period.

London recorded the greatest annual increase in monthly rental values, with rents rising by 9.44% (£124), from £1,314 during Q2 2021 to £1,438 in Q2 2022, it added.

Region Average Q2 2022 Rent Change since Q1 2022 (£) Change since Q4 2021 (%) Change since Q2 2021 (%)
London £1,438 £23 4.13% 9.44%
South East £1,004 £24 4.47% 7.15%
South West £865 £32 3.72% 8.53%
East £914 £20 3.51% 6.28%
East Midlands £662 £6 3.44% 5.75%
West Midlands £714 £18 4.23% 10.70%
Yorkshire £592 £12 1.72% 5.34%
North West £675 £19 4.65% 7.66%
North East £587 £22 5.96% 10.75%
Scotland £710 £35 8.07% 9.23%
Wales £670 £18 4.52% 7.03%
Northern Ireland £578 -£3 1.23% 3.58%
         

 

Property Type  Q2 2022 Q1 2022 Q2 2022 vs Q1 2022 (%) Q2 2022 vs Q4 2021  
Flats £885 £863 2.55% 4.49%
Terraced £839 £821 2.19% 3.58%
Semi-detached £943 £920 2.50% 4.20%
Detached £1,184 £1,158 2.25% 3.59%


Comments

Beaver

11:30 AM, 28th July 2022, About 2 weeks ago

I'm not sure that anybody should be surprised by this; if the Bank of England puts interest rates up that has a disproportionate effect on landlords because unlike other businesses they can no longer offset all their finance costs against their income. Raising interest rates will inevitably raise rents.

I think the other factor that's missing here is that during lockdown the government told tenants that they didn't have to pay their rent and gave landlords no compensation for the loss of business: So landlords are going to be recovering those rent arrears now.

Beaver

12:06 PM, 28th July 2022, About 2 weeks ago

Reply to the comment left by Beaver at 28/07/2022 - 11:30
PS: That doesn't just affect tenants. According to this site:

https://www.propertyreporter.co.uk/finance/ortgage-costs-now-account-for-28-of-disposable-income.html

Mortgage costs now account for 28% of disposable income. This site:

https://www.statista.com/statistics/379934/household-expenditure-categories-uk-by-decile/

Has a slightly different figure but still thinks that housing costs are 22% of disposable income, ahead of food costs.

If the Bank of England continues to raise interest rates that will fuel both rises in housing costs and demands for increased wages. It will increase inflation.

As a landlord you cannot offset your finance costs against your revenues any more. Your only remedies faced with rising costs and increased risks of providing residential accommodation are:

(1) Raise Rents.
(2) Evict.
(3) Sell. But you aren't going to be selling to a tenant who cannot afford a mortgage.

Blodwyn

13:17 PM, 28th July 2022, About 2 weeks ago

Could this have something to do with economic reality?
Not a total fan of either would-be PM but Mr Sunak seems to be the grown-up in the room. Ms Truss flaky about her background (Dad a Professor, she's not from The Struggling Classes) and school (Tim Kirkhope her then MP whom I've known 60 yrs said very good) and light on economic reality (can she count - what is between debit and credit to balance?)? Her success will doom the Conservatives to defeat next time round.
Then watch the damage!

Trisha

13:50 PM, 28th July 2022, About 2 weeks ago

The DPS has contributed to the rise. Their unreasonable biased decisions in favour of tenants has forced landlords to increase rent. Irrefutable evidence being ignored and nonsensical decision making has rendered deposit protection useless. The result?…..even the good tenants are penalised by higher rent setting to compensate for the incompetent DPS who refuse to compensate landlords for the bad ones.

Ian Narbeth View Profile

11:21 AM, 29th July 2022, About 2 weeks ago

Reply to the comment left by Trisha at 28/07/2022 - 13:50Hi Trisha
I don't think the way DPS deals with claims has a significant effect on rents. The problem for landlords is they don't present their cases properly. They don't get a second bite of the cherry. If information is missing or something is unclear the DPS do not ask the landlord to provide the missing information or to clarify. We have had to make a few claims and never had a problem.

The real causes of the recent rent increase IMHO are a number of landlords withdrawing their rental properties and leaving them empty or selling them. When there is already a shortage of housing, a further small decrease in the supply of an essential good (with no substitute) will result in the price rising. (I am sure any economists out there could explain this better than I can.)

In the case of HMOs, rising utility costs borne by the landlord are also contributing.

Trisha

15:26 PM, 29th July 2022, About 2 weeks ago

Reply to the comment left by Ian Narbeth at 29/07/2022 - 11:21
I agree with all the other factors you point out, stamp duty, loss of wear /tear allowance, no application fees, section 24 etc have all contributed. But we dealt with the DPS and provided irrefutable evidence which they ignored with no redress. I’ve spoken to many others who experienced the same. So we raised the low rent to compensate the loss and to hedge against it happening again. Other landlords have done the same.

Beaver

15:58 PM, 29th July 2022, About 2 weeks ago

Reply to the comment left by Trisha at 29/07/2022 - 15:26
It's certainly true that the last time I tried to withhold the deposit I wasn't allowed to keep all of it so I didn't manage to recover all of the costs of the damage done by the tenant. "The deposit" ("My deposit"?, "The TenantsDeposit?") was only available to cover part of my costs. It was just cheaper to accept part payment than follow due process and recover all of the costs.

I have just asked my agent to raise the rent: I've increased the rent because interest rates are going up, the EICR changes increased my costs and pretty much everything else out there at present increases my risk. That does include the fact that I am now only allowed to hold 5 weeks rent, not 6; I may not get all of it back; and some of the recent proposed changes under discussion talked of tenants having portable or lifetime deposits; I think the idea was that you release the deposit before the tenancy ends (so in effect you would have no deposit).

As a landlord there is nothing out there that reduces my risk and nothing out there that reduces my costs. The only option you have is to raise rents. So nobody should be surprised that they are going up.

Gary BTLowner

11:12 AM, 11th August 2022, About 2 days ago

Reply to the comment left by Trisha at 28/07/2022 - 13:50
Absolutely Trisha. The govt, govt instigated bodies and the press hate landlords. But see a recent Telegraph article that supports us.......(https://www.telegraph.co.uk/property/buy-to-let/next-prime-minister-needs-undo-damage-unleashed-landlords/)

DSR

7:24 AM, 13th August 2022, About 12 hours ago

another 'no sh*£ Sherlock' headline.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now