A study by HomeLet has indicated that huge rental demand has brought about another rise in monthly rent prices, prompting one estate agent to say that there could be no better time to consider becoming a landlord.
The latest figures show that the average rent in the UK stands at £1,061 per month, a 7.5 per cent increase on the same time in 2020 and a 0.8 per cent rise on the numbers from the previous month.
In London, an annual rent price hike of 6.4 per cent has taken the average monthly price up to £1,752 per month.
Factoring out the capital, the average UK rent price has risen 7.6 per cent year-on-year to £891 per month.
Wales and Scotland have experienced the most significant annual increases, with rent prices going up by 12.9 per cent and 10.8 per cent respectively.
The southwest of England was the sole anomaly, experiencing a significant drop-off in rent price with the average rent now down to £971 per month, a decrease of 3.5 per cent on September 2021.
Although UK rents have gone up by 9.7 per cent compared to pre-Covid levels reported in 2019, HomeLet’s marketing lead Matthew Carter clarified that the majority of increases actually occurred in the 2021 calendar year.
Carter explained: “At first, we saw rents outside London surge whilst prices in the capital dipped, but we’re now seeing rents in London rise much more rapidly, fuelling the record rental levels we see across the country.
“Typically, rental prices rise in line with inflation and wage growth; that’s something we’ve continued to see. Despite record rents, tenants moving home spend a similar percentage of their income on their monthly rent. In September, the average household spent 29.6 per cent of their gross income on rent, compared with 30.9 per cent in September 2019, before the pandemic.
“Housing follows the same fundamental laws of economics as other goods that consumers need. Ultimately demand, coupled with lower stock levels for certain types of property, are driving up rental values. The concern is that we’re at a point where there are some areas with exceptionally high demand.
“Landlords and the lettings market have faced a continued raft of changes and legislation; the government needs to carefully consider how any future policy might impact the 4.5 million households in the private rented sector. The government’s push on homeownership shouldn’t be done to the detriment of an industry that plays a critical role in UK housing.”
With rental demand soaring across the UK and prices edging higher and higher, Richard Zeff, managing director of independent London estate agent Stones Residential, believes that now is the time for anyone considering becoming a landlord to dip their toe into the market.
Referring to the surge in demand, Zeff outlined: “Investing in property can be a great way to make the most of any money one has to invest, and now is a great time to get into property. The latest stats show that the numbers of prospective tenants are continuing to increase. Per letting agency branch according to the May 2021 figures, the average number of tenants jumped from 82 up to 97. In 2020, the highest average number in May was 70.”
Zeff also believes that the numbers of properties up for rent are reducing, and with exceptionally high demand in some areas, the industry needs landlords now more than ever to meet this need.
“The average number of properties managed by each letting agency branch for this year was at 203 in May. The year before, it was 208. This seems like a small reduction per branch but that’s an average and multiplied across the whole of the UK, it has a significant impact”, Zeff explained.
“The lack of available properties also has a knock-on effect on negotiating. Some tenants do want to negotiate over rent but this number has reduced. This could be because they would rather secure the property than worry about negotiating. The number of tenants that negotiated rent reductions in May 2021 was at the lowest since records began, standing at 0.9 per cent.”
Addressing individuals who may be considering entering the sector but are concerned about relationships with their tenants, Zeff pointed out that there has been a reduction in the number of landlord possession claims, which became apparent between April 2020 and March 2021.
This, according to Zeff, suggests that relationships within the sector between landlords and tenants are becoming more amicable following the height of the pandemic and is another reason to encourage prospective landlords to dive into a booming rental market.
“Between April 2020 and March 2021, the numbers of landlord possession claims have fallen. This suggests that tenants and landlords have invested in a collaborative approach to the challenges of the pandemic, and this bodes well for the future of those relationships and the industry.”
If you are considering becoming a landlord but are unsure about how to do so, or are experienced in the industry but want to maximise your yield, you can contact Richard Zeff and Stones Residential for a free, no-obligation chat.
