Buy to let returns rising sharply

UK rent rises for new tenancies have hit their highest level since Rightmove started keeping records, with Manchester up year-on-year by an eye-watering 23%.

The Rental Trends Tracker, based on over 300,000 newly advertised properties, showed that the average rent rose by 11.8% in the last year and by 40% over the last decade. Rightmove believe that they will continue to rise for the rest of 2022.

Key take-aways

The national average monthly rent now stands at £1,126, up 3.5% in the last quarter, 11.8% over the last year.

The average rent in Greater London is now £2,257, up 15.8% over the last year.

Average rents outside of  London are up by 19% in the two years since the start of the pandemic.

Asking rents outside of the capital are now rising at the fastest rate that Rightmove have seen in the 16 years of their reporting. Similarly, the rise of 15.8% in London is a record.

The supply of rental stock has fallen below demand for each of the last two years and is the main reason for the surge in prices. There are small signs of improvement, with 8% more homes coming to market, against a 6% rise in demand. However, supply remains 26% below the levels of a year ago. Competition amongst tenants is fierce.

"The story of the rental market continues to be one of high tenant demand but not enough homes to meet that demand. The wide gap that has been created over the last two years will take time to narrow. Until then, this imbalance will continue to support asking rent growth."

Tim Bannister, Director, Rightmove

Biggest movers - major cities

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Average Rent

Change y-o-y

Manchester

£1,127

+23.4%

Liverpool

£897

+19.4%

Birmingham

£999

+16.1%

Bristol

£1,265

+15.8%

London

£2,257

+15.8%

Looking ahead, rental increases may be moderated by more stock coming to market. Rightmove found that the number of landlords planning to increase their portfolios (34%) outnumbered those planning to decrease (11%).  They expect rents to continue to rise, albeit at a more modest pace, predicting a further 3% by year end.