Since the beginning of the pandemic, rents outside of London have grown by £177, setting a new high of £1,126 per month. According to data from Rightmove, the average monthly rent is up 3.5% from the previous quarter and is 11.8% higher than it was a year ago. It means that since records have been kept for the past 16 years, they are currently climbing at the highest yearly rate. Since March 2020, rents have increased by 19%, or £177. Over the previous two years, rental costs have skyrocketed. Experts, including Estate agents in Manchester opine that before the pandemic, it took eight years to grow at the same rate.
The last quarter
According to Rightmove, the 3.5% increase this quarter is the second-highest quarterly increase in ten years. The analysis was based on asking for rentals. The average monthly rent in London has increased as well, setting a new high of £2,257 this quarter. The annual increase in asking rentals in London is currently 15.8%, the highest percentage ever recorded for any location. The rises are being ascribed to a lack of rental homes and rising renter demand.
Rightmove noted that although there are still not enough rental homes available, there are still encouraging signals. Since the year’s commencement, there have been 8% more new rental postings. The newest rental listings entered the market in June compared to any other month so far this year. Alongside these positive developments, the number of rental units available is still down 26% from last year’s levels, while demand is up 6%. This implies that tenant competition is still severe.
What’s ahead?
Rightmove forecasts that average asking rent growth will increase to 8% by the end of the year, up from the 5% forecast at the beginning of the year, despite the fact that high tenant demand is still exceeding last year’s exceptional levels and the supply of rental properties is taking a while to recover. Rightmove then identified the areas with the biggest yearly change in rent, with Manchester coming in at 23.4%. To know the accurate values of your property in the area opt for property valuation in Manchester.
Renting and purchasing a home were both examined by Rightmove. It was discovered that average mortgage payments for homes with two bedrooms or fewer had increased by 13% over the past ten years as a result of historically low-interest rates. In contrast, comparable rental payments for the same houses have increased by 40%. Additionally, according to Rightmove, more landlords intend to increase their portfolios than decrease them. This was viewed as a show of market confidence despite difficulties, including legislative changes and the newest modifications to EPC regulations.
What does it mean for the landlords?
In a recent poll, 34% of landlords stated they intended to increase their portfolio during the following year, compared to 11% who intended to decrease the number of properties they rented out. According to Rightmove, the story of the rental market continues to be one of high tenant demand but not enough available houses to match that need. The number of tenants wishing to move increased the previous year significantly, and this year’s tendency has not abated. While stock levels are beginning to improve, with June seeing the highest number of new rental listings come to market thus far this year, it will take time for the large gap that has been built between supply and demand over the last two years to reduce,” says a recent report.
On a final note
Rightmove said their original prediction of a 5% increase in asking rents by the end of the year had been amended to an 8% increase. The data was validated by letting agents, who noted a substantial rise in rental prices. Due to the pandemic’s suppressed expansion, Birmingham City Centre’s rental costs have sharply increased in the second quarter of this year. When you combine this with the dearth of high-quality inventory, you get a pool of applicants who start shopping for homes six to ten weeks before they actually need them. In comparison to 2021, when applicants typically sought four to six weeks before their requirement, this is a significant increase.
The number of tenant inquiries and lease extensions has been steadily increasing in London’s rental market during the course of the second quarter of this year. Those who were able to rent a home at a reduced price during the epidemic are eager to hang onto their offer as long as they can, especially in light of growing living expenses. London’s rental market has also seen an unparalleled corporate demand that is outstripping supply with the return of office workers, international students, and corporate renters alike. Due to the intense competition, many tenants are willing to pay more than the asking amount to acquire a rental which is good news for all landlords.
