Despite the current turmoil across the UK, with the country set to slowly leave lockdown in the coming months, rents have risen across many regions. This will be a welcome relief for private landlords who have been under intense pressure over the last 12 months. Indeed, as we covered in our recent articles, many have been forced to take on debt as tenants struggle to pay their rent.
Recent increase in monthly rents
We have seen a couple of reports from HomeLet and Hamptons which have been slightly different, but show the same trend. In the HomeLet report we learned that:-
- Average UK monthly rent is now £981, an annual increase of 2.9%
- Excluding London, this figure falls to £839, an increase of 5.8%
- In the year to January 2021, London rents fell by 3.9%
- Rents in Northern Ireland also fell over the period, showing a decline of 2.1%
The data from the Hamptons report was as follows:-
- In the 12 months to February 2021, newly let property rents increased by 8% outside of London
- The South-East of England saw an annual rise of 10.6%
- The figure was 9.2% for the South-West of England
- In the North of England rents increased by 6.8%
- Central London rental figures fell by 17.7%
- Greater London rent increased by 0.2%
- Outer London rents pushed ahead by 5.3%
The trends in these two reports are broadly similar, and also indicate what many see as a new long-term trend in the private rental market…..
Changing regional rental markets
Even when the current COVID pandemic is over, many experts believe we will see a long-term change in working habits. While forecast for many years, it does seem likely that more people will work from home, offices will be less busy which has led to a new trend in the property rental market. As seen with the figures for Central London, many tenants are now looking towards locations with more space, both inside and outside the property. In effect their new home offices.
There has also been a greater focus on areas such as the North of England, where, relatively speaking, many investors believe they get “more bang for their buck”. This is a trend which began prior to the pandemic, something prompted by the UK government’s decision to decentralise various public offices. This saw the likes of HMRC opening new offices in the North and Midlands, increasing demand for local residential and business property.
It is interesting to note that this move by the UK government also prompted many private companies to look at withdrawing from Central London, which is relatively expensive.
Economic recovery will dictate short to medium-term rents
While there is no doubt the recovery in rental figures has been welcomed by private landlords, the short to medium-term outlook is still relatively cautious – but optimistic. We have also seen a reduction in private rental stock, with 300,000 fewer rental properties coming to the market since the pandemic began. This is a drop of almost 30% over the last 12 months. As a consequence, this has squeezed rental figures higher, especially in the new areas of demand.
On a more positive note, the Bank of England is still cautiously optimistic for the UK economy in the short to medium-term. There may be some bumps along the way, such as a reduction in vaccination supplies and a potential third wave of the pandemic in Europe, but all in all, the UK is well set for recovery. It may take some time to sort out the debts that many private tenants have built up during the pandemic – and the financial pressure this has caused private landlords. This prompts the question, when will the UK government actually help private landlords?
It was interesting to see that with the exception of London and Northern Ireland, there has been a broad increase in rental figures over the last 12 months. Properties offering greater space inside and outside – part of the new private rental trend – have seen higher than average rental increases. This is something which landlords will need to be aware of going forward. Despite concerns that the recent trend had ended, there also seems to be renewed demand for property in the North of England, often seen as offering good value for money.
There has been little in the way of good news for private landlords since the pandemic began. Confirmation that rental prices seem to be moving upwards will be a blessing for many who have certainly felt the financial pinch over the last 12 months.