Credit, Collections & Insolvency News
Average UK rents increased for the fifth consecutive quarter during Q4 2021 as pressure on the supply of rental properties during the pandemic continues, according to analysis by The Deposit Protection Service (The DPS)
The research found that average rents reached £834 during the final three months of 2021, an increase of £16 (1.96%) on the previous quarter and a £42 or 5.30% increase on Q3 2020.
The organisation’s quarterly Rent Index also revealed that South West rents, which traditionally lag behind the national average, drew level for the first time, rising by £19 (2.33%) during Q4 2021, and by £54 (6.92%) from £780, the largest regional percentage increase during the past 12 months.
Average rents have increased across all property types since Q3 2021, with rents on detached properties increasing the most; on average by £26 (2.33%) to £1,143, and also rising £88 or 8.34% from Q3 2020, the report reveals.
The organisation also said that Q4 2021 rents also rose across most of England – with London, the South West, and Yorkshire seeing the largest value rises – contributing to an annual UK average rent increase of just over 4% for 2021.
Outside London rents in the city of York saw one of the highest increases: £71 (9.49%) from £748 to £819 during Q4 2021, a rise of £120 or 17.17% from £699 since Q4 2020, said The DPS.
Conversely, the organisation said the city of Southampton saw one of the largest falls in rental value during Q4 2021, decreasing £122, (-15.12%) from £807 to £685.
Average rents in the North East, traditionally one of the cheapest regions in the UK to rent, increased by £5 (0.91%) from £549 to £554 during Q4 2021, with rents increasing £34 (6.54%) during the past 12 months.
During Q4 2021 London rents increased for the second consecutive quarter, ending 2021 at £1,381, an increase of £42 (3.14%), the highest value regional increase, and a £64 (4.86%) increase on the same quarter during 2020.
The London borough of Islington saw the sharpest value rise in rent during Q4 2021, an increase of £273 (19.6%), from £1,393 to £1,666, added the organisation.
Matt Trevett, Managing Director at The DPS, said “During Q4 2021 rents increased in the vast majority of UK regions and across all property types, with demand for detached properties driving the greatest increase in rental value for these properties.”
“Our figures also show that renters were less likely to move during the past 12 months, suggesting lower availability of stock and therefore perhaps more limited options for moving.”
“We’re also seeing definitive signs of recovery in London, particularly the return of the popularity of flats in some areas, suggesting that some tenants are coming back to the capital.”
Paul Fryers, Managing Director of Zephyr Homeloans, a specialist buy-to-let mortgage provider also part of the Computershare group, said ”There is currently significant pressure on rental stock across the country.”
“Reasons are complex, but they include landlords selling up to capitalise on high sale prices, plus a shortage of new build homes as a result of supply chain and raw materials issues.”
“We’re hearing stories of landlords receiving unprecedented levels of interest, with some renters willing to pay rents upfront and even stories of some tenants willing to pay over the odds to secure properties.”
Sarah Coles, Senior Personal Finance Analyst at Hargreaves Lansdown said “Officially rents are up 1.8%, but anyone who has been battling to find an affordable rental property, or having to offer more than the advertised rent to secure somewhere knows that in reality rents are rising far faster in much of the UK.”
“The ONS figures measure all rental prices, rather than just new rents coming to the market. It means someone who locked in a deal one or two years ago will feed into these figures in exactly the same way as someone who rented yesterday. And as a result, it is understating recent rental rises.”
“The HomeLet Rental Index more closely reflects new rental prices, and shows the average monthly rent is up 8.3% in a year to £1,060.”
“And this isn’t the last of it. The most recent RICS report highlighted that the number of renters is still rising, as the number of households overall increases and more people look for a place of their own after being locked down with their housemates. Meanwhile, the number of landlords is falling as tax changes persuade them to leave the market and capitalise on higher property prices, or rises in short term letting prices tempts them to move into that market instead. These trends show no signs of slowing, so there’s going to be even more demand for the remaining rental properties in the coming year.RICs expects rent rises to average 5% over the next five years, although in some areas the rises will be even harder to manage.”
“For the 17% of people who rent privately in the UK, this is the last thing they need. They already pay an alarming proportion of their income in rent each month – at 31% compared to the 18% that mortgage holders pay – so with prices rising on all sides, finding an even bigger chunk of cash for rent will be incredibly difficult. The HL Savings and Resilience Barometer produced in partnership with Oxford Economics shows that renters have already faced horrible blows to their finances over the past year, and are much less resilient than their homeowning counterparts. Rising rents could inflict a terrible toll.”
“The official figures show that London bucked the trend of rising rents, and is the worst performing region. The pandemic drove a coach and horses through the London rental market. It halted the flow of overseas renters, and ramped up homeworking and hybrid working – which meant renting a shoebox near work made far less sense. However, the more recent figures from HomeLet reveal that London is bouncing back, and new letting prices are up 12.6%. For the 27% of Londoners who rent privately, there’s a real risk that this pushes them over the edge.”
| Property Type | Q4 2021 | Q3 2021 | Q4 2021 vs Q3 2021 % | Q4 2020 (£) | 2021 Q4 vs 2020 Q4 % | ||
| Flats | £847 | £830 | 2.05% | £803 | 5.48% | ||
| Terraced | £810 | £792 | 2.27% | £759 | 6.72% | ||
| Semi-detached | £905 | £891 | 1.57% | £847 | 6.85% | ||
| Detached | £1,143 | £1,117 | 2.33% | £1,055 | 8.34% |
