Rents continue to rise in all UK regions

The madness goes on as rents continue to rise everywhere. With demand constantly rising and supply static at best, affordability is being stretched in most regions.

The newly published Homelet Rental Index shows that the supply/demand imbalance is driving rents ever higher as prospective tenants struggle to find somewhere to live.

According to Homelet's data, the national average rent rose by 1.1% in July alone, and by 10.3% over the last year. This is based on average rents actually achieved, not asking prices, and does not include renegotiated existing tenancies. The average rise for existing tenancies was 5.1% over the year according to the ONS.

"Every UK region sees a month-on-month increase in average rental prices in July 2023, with the average UK rental price now at £1,243 pcm" said Andy Halstead, CEO of Homelet.

Inevitably, Scotland leads the way with an average increase of 15.8% year -on year. Their supply crunch is deepening as landlords exit the market after price caps and strict eviction rules were introduced last year. London also saw a very substantial yearly increase of 12.9%, followed by  the South East at 9.8% and the North West at 9.7%.

Londoners now spend an average of 38% of their income in rent, up from 32% six years ago. In the South West and South East the proportions are 34% and 33% respectively. Only time will tell where the ceiling is.

Reading the mainstream press might lead you to believe that the supply deficit is due to landlords leaving 'en masse', but there is little evidence to support this. The available hard evidence comes from the Office of National Statistics which says that the number of private landlords has remained steady since 2016. This data only goes up to 2022 and any subsequent numbers are anecdotal or are published by special interest groups.

New households forming since the pandemic, higher student numbers and increased net migration have all contributed to increased demand.

There always has been an 'exodus' of landlords, with those selling up being replaced by new entrants. It may turn out that tax changes, higher mortgage rates and increased regulation has deterred these replacement investors. The number of rental properties coming onto the market is down by some 30% since the pre-pandemic years.

Whatever the causes of the supply/demand imbalance, rents will continue to rise until the affordability ceiling is breached.