8:59 AM, 23rd August 2022, About a month ago
Strong rent price growth means that tenants have lost a bedroom when spending the same amount of cash as they did in 2020, research reveals.
The findings from Hamptons show that the average two-bed rental property at £1,068 per month today is what renters were spending for the average three-bed rental just 16 months ago.
And the average rent price for a one-bed property has risen from £929 per month – which is what the average two-bed property was costing two years ago.
Hamptons says that previously it would take six years for average rents to rise by an amount equivalent to the cost of a bedroom.
They say that over the last 12 months, rents have risen by 8.3% to deliver the third month of rent growth cooling – but the sixth strongest annual increase over the past 10 years.
Analysing the figures, it appears that between July 2020 and July this year, tenants saw the largest erosion of their buying power over any period since 2013.
This means that tenants’ budgets are not stretching as far as they used to.
It also means that tenants are looking at trading down and losing a bedroom, so they spend the same amount of rent as they did in 2020.
The figures from Hamptons also show that over the same period, rents rose by 16.2% or £165 per month.
And it is tenants in the South West who are seeing what they get for their money falling quicker than anywhere else.
The rate of their spending power being eroded was the equivalent of a bedroom over just six months because rents rose by 18.7%, or £169 per month.
In second place is Scotland where spending power was eroded over 17 months, and the North West where it was eroded over 19 months.
However, for tenants in Wales, it took an average of 30 months to see their money shrinking by the equivalent of a bedroom.
Aneisha Beveridge, the head of research at Hamptons, said: “After two years of record rental growth, tenants aren’t seeing their budgets stretch as far as they used to.
“And they are likely to be squeezed further still by a mix of investors leaving the market and the landlords left behind looking to pass on their higher mortgage costs.
“Tenants trying to move are increasingly facing a cost-cliff with market rents rising faster than what they’ve been paying for their current homes. Often this means they face compromising on what and where they rent next, with some having to trade down.”
She added: “There are some signs that the rental stock slump is close to bottoming out. But with two-thirds fewer homes on the market than five years ago, there isn’t room for them to fall much further.
“In a reversal of last year, it’s city centre markets which have seen the biggest year-on-year falls in the number of homes up for rent, meaning it’s here that tenants are still facing double-digit rental growth.
“Meanwhile suburban and country markets have quietly recorded small rises in stock levels and have seen rental growth soften.”
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