UK rents showed “no sign of slackening” in January, with average letting prices up 8.3% on a year ago, while 40% of tenants who moved home in London last year chose to leave the capital, data from Hamptons shows.
Rental growth in January was the sixth strongest month for annual rental growth since the estate agent began its Monthly Lettings Index in 2014.
The Midlands and North of England notched up the highest rises at 11.2% and 11.0%, respectively. Rents lifted in every region across the country.
In the capital, tenant costs eased slightly to 9.1% as inner London rents “completed their catchup to pandemic levels, slowing the headline rate of growth across the city as a whole”.
For the seventh month running, rents in one-bed homes grew faster than larger homes as the hangover from Covid-19 continues to unwind, the report says.
Both one- and two-bed homes posted faster annual growth in January than in any month since the index began nine years ago.
In November 2021, the average four-bed rent peaked at 126% more than the average one-bed, the study points out.
But this gap has since closed on the back of the average rent for one-bed rent rising 11.3% over the last year compared to 2.7% for four-beds.
This leaves the average four-bed home costing 108% more than the average one-bed in January, still slightly above the long-term average of around 100%.
The report also points out that around 90,370 households, or 40%, of renters who moved in London over the last year, chose to leave the capital, driven by the “rapid recovery in London rents post-Covid”. This figure is up from 28% a year ago.
The 90,370 tenants who left London last year compares to 62,210 homeowners who left the capital.
“This marks a return to form and a reversal of 2021 when more homeowners than renters left during a single year for the only time during the last decade,” the survey adds.
Areas that bordered London became home to renters moving out of the city last year, with Tandridge, Epping Forest and Sevenoaks topping the list.
Although, 38% of former London renters headed to the Midlands or the North of England, up from just 27% in 2019.
The report says: “Leavers increasingly keep their job in the capital while working remotely or commuting back occasionally. Instead, tenants are leaving to make their rent go further and renting larger homes in nicer neighbourhoods.”
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Hamptons head of research Aneisha Beveridge says: “While house price growth continues to slow, rents show few signs of deviating from their upward trajectory.
“The number of homes coming onto the market remains well below pre-Covid levels, with landlords facing tough decisions as to whether the arithmetic still works if and when mortgage rates expire.
“However, the downward drift in interest rates will bring some relief for those who need to remortgage in 2023.”
She adds: “The rapid recovery of London rents over the last year has left record numbers of tenants looking around for cheaper options.
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“While the commuter belt is often prohibitively expensive for would-be first-time buyers, low yields mean renting remains relatively affordable compared to buying.
“The number of homes on the market here has increased faster than in the capital this year, tempting tenants to cross the M25.
“We expect the number of renters leaving the capital to continue rising for the foreseeable future. London leavers are generally in their mid to late 30s, seeking more space for a family or simply for a quieter life.
“But as younger generations are less likely to own their own home, leavers are increasingly likely to be renters rather than homeowners.”
By Roger Baird
Source: Mortgage Strategy