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Average rent in Britain has risen to over £1,200 a month for the first time in history, new data shows.
According to the Hamptons estate agents’ figures for October, average values were £1,204 per month. It’s an increase of £80 a month or 7.1 percent higher than a year ago.
It means tenants will have to pay an extra £960 a year in rent compared to this time last year.
Due to the rapid rent growth, these households now spend 44 percent of their after-tax income on rent, the highest share since the start of registration in 2010.
Average rent in Britain has risen to over £1,200 a month for the first time in history
Hamptons figures showed that average rents crossed the £1,100 mark in September 2021.
This was after crossing the £1,000 milestone in June 2019, before diving during the pandemic and crossing that point again in August 2020.
So far this year average rents across five regions have entered a new price range of £100.
Greater London was last, with rents crossing £2,100 a month for the first time in October this year.
According to Hamptons research, average rents have crossed the £1,100 mark in September 2021
It was driven by rents in central London reaching a new record high of £2,863 per month in October, £1 per month more than when rents in London’s most expensive postcodes previously peaked in October 2019.
It means rents in every part of the country are now higher than they were at the start of the pandemic.
Since January 2020, just before the start of the pandemic, rents across the UK have risen by 19 percent.
It equates to an additional rent of £2,351 a year, a significant sum of money to be found amid the cost of living.
Hamptons said there had been more rental growth since the onset of Covid than for at least eight years before.
While national rents were back to January 2020 levels within eight months, inner-city London took 30 months to recover.
In October, the average house in inner-city London cost 9 percent more to rent than in January 2020.
But it is in the south west where the strongest growth has been seen since, with rent increases of 32 per cent or £265 a month.
Rent growth of newly let properties has soared to 32 percent in some parts of the country
Rapid rent growth in recent years means that the average privately rented household in Britain now spends 44 percent of its after-tax income on rent; the highest share since registration began in 2010.
Two years ago, the average tenant spent 41.6 percent on rent, up from 39.2 percent in October 2012.
London remains the least affordable region, with an average rent of 62 percent of the average renting household’s after-tax income.
However, due to weaker rental growth in the capital, it has increased by just 1 percent since October 2020, the third smallest increase in the country.
North London estate agent Jeremy Leaf said: ‘Demand is rising, supply is falling, can only mean one thing: rents will continue to rise.
‘Interest has been sparked by aspiring first-time buyers who are deterred by rising mortgage rates.
“We need more new landlords and existing landlords to stay, but we need to make it worthwhile without compromising standards or marginalizing tenants.
“However, at the sharp end, we notice that there has been some resistance from tenants to higher rents lately as the cost of living is really skyrocketing.”
The average privately rented household in Britain now spends 44 percent of their after-tax income on rent
The pace of rental growth across the UK has stabilized in recent months, with rents rising 7.1 percent year-on-year in October.
It is the fifth straight month of single-digit gains after annual rental growth peaked at 11.5% in May this year.
Meanwhile, the number of available homes has risen for the second month in a row, meaning that there were 15 percent more in October 2022 than in October 2021.
However, this increase can be compared to a period when stock levels were at an all-time low and there are still 47 percent fewer homes available than two years ago.
London is now the only region where there are fewer homes for rent than last year.
It coincides with an 11 percent year-over-year rent increase, driven by the recovery of inner-city London, where rents rose 27 percent year-on-year.
The number of available rental properties has increased for the second month in a row, meaning that there were 15 percent more in October 2022 than in October 2021
Aneisha Beveridge, of Hamptons, said: ‘Strong rent growth has pushed average rents to another £100 price range for the third time in just over two years.
“The good news for renters, however, is that rental growth has slowed from its summer double-digit peak and is likely to be around 5 to 6 percent by the end of the year.
This is good news for many households who see other costs rise as inflation peaks. And it also means that, unlike at the start of the year, rents are following income growth more closely, which should ease pressure on the cost of living for tenants.”
She added: “While risks to future home price growth are mounting, the same risks are likely to amplify rental growth in the near term.
‘High mortgage interest rates keep more potential buyers on the rental market longer, partly as a result of which demand has increased by 5 percent compared to the record levels of last year.
The cost of servicing a loan at 90 percent has increased 65 percent in the past year, meaning tenants now spend a comparable proportion of their income on rent — 44 percent — as they do on a mortgage at 36 percent.
“Landlords” costs are also rising, which they will likely try to pass on to tenants in the form of higher rents or sell if they are unable to cover the costs. That is why we think that rents will still rise by 5 percent in 2023.’