9:33 AM, 15th November 2022, About 11 months ago
The average rent on a newly let home in Great Britain rose to £1,204 per month in October, up £80 or 7.1% year-on-year, costing the average tenant an extra £960 each year, data reveals.
The findings from Hamptons show that rents in five regions have nudged into the next £100 price band this year, with the most recent being London where rents passed £2,100 for the first time.
This was driven by rents in inner London reaching a new record high of £2,863, meaning rents in every part of the country have now surpassed pre-Covid levels.
The real estate firm says that since pre-Covid (Jan 2020), rents have risen 19%, equating to an extra £2,351 a year for tenants.
That means renters have seen more rental growth since the beginning of Covid than in the previous eight years.
The average privately rented household now spends 44.0% of their post-tax income on rent, up from 41.6% in October 2020 and 39.2% 10 years ago.
London remains the least affordable region, with the average rent taking up 62% of the average renting household’s post-tax income.
The capital is also the only region where there are fewer homes available to rent than last year.
This coincides with an 11% year-on-year increase in rents, driven by inner London’s recovery where rents rose 27%.
Hamptons says that average rents passed the £1,100 mark in September 2021 – just 14 months ago.
And rents first crossed the £1,000 per month milestone in June 2019, before dipping during Covid and re-passing that point again in August 2020, 15 months later.
Aneisha Beveridge, Hampton’s head of research, 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.
“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.”
Ms Beveridge points out that 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 adds: “The cost of servicing a 90% LTV mortgage has risen 65% over the last year, meaning tenants are now spending a similar proportion of their income on rent (44%) as they would on a mortgage (36%).
“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 5.0% in 2023.”
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