Rising rents and an increasing number of households renting meant that 2017 was a record year for rent, with the total rent bill rising to £1.8 billion, according to the latest figures from Countrywide.
Meanwhile, ARLA Propertymark’s latest survey of its letting agents reveals that almost one in five (19%) tenants saw rents go up in January 2018 – as compared to 16% in December. The number of properties its letting agents managed dropped by 8% in January, with 185 properties per branch, compared with 200 in December 2017.
ARLA also reports that there are more potential tenants on its agents’ books, with an average of 70 registered prospective tenants per branch in January 2018, compared with 59 in December 2017.
While this paints a bleak picture for renters looking into 2018, the number of tenants experiencing rent rises is actually down year on year. In January 2017, 23% of tenants had their rents increased, and 30% were subject to rent rises in January 2016.
David Cox, chief executive of ARLA Propertymark, says: “Renters are in for a rough ride in 2018. Housing stock is falling as rising taxes continue to force established landlords out of the market and deter entry into the sector. The fact that one in five tenants are experiencing rent increases is just another blow.”
Other rental indices seem to offer mixed messages about London. Your Move’s latest figures for January report rents falling over the year by 0.8% in London, the Office for National Statistics (ONS) sees a meagre 0.2% rise, and The Deposit Protection Service (The DPS) reports rents going up by just 0.44% over the year. In contrast, Countrywide reports rents rocketing by 3.3% in the capital and HomeLet says rents in the capital have gone up by 2.3% over the year.
Key stats at a glance:
- ARLA Propertymark January Private Rented Sector Report – 19% of tenants experienced rent hikes.
- Countrywide Monthly Lettings Index – rents up by 2.4% over the year to January 2018.
- DPS Rent Index – rents up by 1.63% over the year to January 2018.
- HomeLet Rental Index – UK rents up by 2.4% over the year to January 2018.
- Office for National Statistics (ONS) Index of Private Housing Rental Prices for December – UK rents up by 1.1% over the year to January 2018.
- Your Move England & Wales Rental Tracker February report (January data) – average rent in England and Wales up by +2.5%.
Rents rise by 2.5%
Your Move reports that rent in England and Wales went up by 2.5% in the year to January 2018, with the average rent now £853 a month.
Rents grew fastest in the North West of England and East Midlands, with typical monthly rent 2.9% higher than in January 2018.
London and the North East were the only regions to see a fall in rents. Rents in the capital fell by -0.8% over the year, with rents in January 2018 averaging out at £1,276 per month. In the North East, rents dropped by 2%, but are still the lowest of the regions at £534 a month.
2017 had the highest bill for rent
Countrywide reports that rental growth went up by 2.4% in the year to January 2018 – the same as in December. This means that the average rent in Great Britain is now £958 a month – £23 more than a year ago. The East of England was the only region to report that rents have remained the same as a year ago – at £925 a month.
It reports that London rents went up by 3.3% over the year, with the average monthly rent at £1,704 – compared with £1,649 in January 2017.
Johnny Morris, research director at Countrywide, says: “The rental market grew in 2017. More people joined the rented sector and average rents increased, meaning 2017 saw the highest total rent bill so far.
“As millennials age, more are becoming homeowners, so the total amount they’re paying in rent has started to drop. But the Generation Rent title still applies. Any fall will be much smaller and slower than seen by previous generations as fewer become homeowners.
“For the second month running, rental growth in London has outstripped the rest of the country. Stabilising rents in central London alongside rises everywhere else in the capital has pushed the rate of rental growth to the highest level for 22 months. While the rate of growth outside London remains higher than for most of last year, it has picked up to a lesser extent. Across northern England, rent rises are running at half the rate of 2017.”
Reviewing the rental market over 2017, Countrywide reports that tenants in Great Britain paid a record £51.6 billion in rent – an increase of £1.8 billion on the previous year and more than twice what they paid in 2007.
It says that this has been driven by both rising rents and an increase in the number of households renting. The total amount of rent paid by tenants has risen in every year for the past 10 years as the number of people renting has grown.
Rents in East Midlands continue to rise
HomeLet reports that average rents across the UK rose by 2.4% over the year to January 2018, with the average monthly rent now £909. When London is excluded, the average UK rental value was £760 in January 2018 – up 2.3% in the past 12 months.
The biggest hike in rents continue to be in the East Midlands, with rents, on average, 6% higher in January 2018 than in the same month of 2017. Average rents, however, are just £617 a month.
Wales was the only region in HomeLet’s Index that registered an annual fall in rents in January, with average rents down -0.3% on January 2017. Over the month, rents dropped in the North East (-1.5%), North West (-0.4%), Wales (-0.3%), Yorkshire and Humberside (-0.2%), East of England (-0.2%) and West Midlands (-0.1%).
Rents in Greater London went up by 2.3% over the year to January 2018, with the average rent at £1,532.
Slowdown continues, says ONS
The Office for National Statistics (ONS) Index of private housing rental prices in Great Britain for January 2018 reports that rents rose by 1.1% in the 12 months to January – down from 1.2% in December 2017.
In England, private rents went up by 1.1% over the year, while rents in Wales went up by 1.4% and rents in Scotland rose by just 0.3%. Rents in London were almost static at 0.2% over the year.
A property in the UK that was rented for £500 a month in January 2017 would cost £505.50 to rent in January 2018, and, according to the ONS. The slowdown is driven by sluggish growth in London.
London growth is ‘sluggish’
The Deposit Protection Service (The DPS) reports in its quarterly rent index that average monthly rent in the UK increased by just 1.63% during 2017. This means that average rent went up from £761.31 to £773.74 a month during the year – half the rate of growth during 2016 (3.25% and £737.33).
It reports that the slowdown is highlighted in London, which saw the lowest increase in average rent of any region over the year, going up annually by a meagre £5.83, or 0.44%, to £1,324.29 a month.
The DPS reports that for the first time since 2013, rental growth in 2017 was lower than the rate of inflation (2.7%).
Julian Foster, managing director at The DPS, says: “Rent growth was slower in 2017 than 2016 when compared to inflation and wages, suggesting that general economic uncertainty is affecting the private rental sector particularly.
“London’s growth was particularly sluggish, bringing down the national average further, although rents here and outside the capital remain a large proportion of wages.
“The current slowdown began in mid-2016 and is likely to be linked to the EU referendum result; it will be interesting to watch the Index as the UK government’s negotiations with the E27 and other economic influences progress during 2018.”
ARLA Propertymark January Private Rented Sector (PRS) Report – research carried out in an online survey among 361 ARLA members from 1 to 8 February 2018.
Countrywide Lettings Index – rent and rental growth figures for each month are based on a three-month rolling average rather than lets agreed in the past month. The index is based on the 90,000 homes let and managed by Countrywide in each year, adjusting for their location and type. It is based on achieved rather than advertised rents and the published monthly rental figures are an average of the new lets and renewals of tenancies over a rolling three-month period.
HomeLet Rental Index – provides data on new tenancies in the UK. As part of referencing prospective tenants each year, HomeLet processes information including the rental amounts agreed, the number of tenants moving into the property, together with the employment status, income and age of all tenants.
ONS Index of Private Housing Rental Prices – an experimental price index tracking the prices paid for renting property from private landlords in Great Britain.
The Deposit Protection Scheme (DPS) Rent Index – a quarterly index from the largest provider of deposit protection in the UK, using a database of millions of properties drawn from 10 years of deposit protection in England and Wales, plus data from its sister schemes, LPS Scotland, and LPS Northern Ireland.
Your Move England & Wales Rental Tracker – based on analysis of approximately 20,000 Your Move properties across England and Wales.