First it was house prices, now rents

Average rents are rising at the fastest rate on record according to reports from Rightmove and Homelet.

Rent rises now outpace house price increases in most parts of the country according to Rightmove's latest Monthly Rental Report.

• Rents are rising at their fastest rate on record
• Asking rents rose 9.9% on average to £1,068 a month outside of London
• London rents are now above pre-pandemic levels at £2,142 a month

Average rental growth is higher than house price growth in most of the UK's regions and in the capital newly advertised rents stand 3% higher than at the beginning of 2020.

Wales (up 12.7%), the North West (12.5%) and the South West (11%) showed the highest rate of growth, followed by London at 10.9%.

Competition among tenants

Rightmove report that tenant demand has increased by 32% compared to a year ago, but the number of available properties has fallen by 51%.

"The imbalance between high rental demand and low rental stock is supporting asking rent prices, and has led to competition between tenants for the rental properties available nearly doubling compared to this time last year" the report states. Rightmove expect a further 5% rise during 2022.

The shortage of properties has been most keenly felt in the major cities in tandem with the return to office working. Demand for flats exceeds available supply by 132%.

Unintended consequences

Over recent years, the governmant has treated landlords as a soft target. Whilst the return to the office has the greatest impact on rental prices, research by Landlord Works, part of Nationwide, shows that a quarter of landlords have put up rents to cover tax changes implemented between 2017 and 2020.

The UK relies heavily on the private rental sector and needs landlords.... Government policy must consider the impact of legislation on landlords and the unintended consequences these changes can have.

Andy Halstead, Group CEO, Homelet