Rental prices grow at record pace | moneyfacts.co.uk

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Michael Brown

Content Writer
Published: 14/07/2022

Since last year, rental prices have jumped almost 12%.

Average UK asking rents outside of London grew at a record pace, increasing almost 12% compared to last year. It means the average rental property has hit a new record of £1,126 per calendar month.

It comes at a time when house prices have hit a record high. According to recent research by Halifax, house prices have increased by nearly 17% since the onset of the pandemic.

Rental prices, meanwhile, have moved in a similar trajectory, increasing by 19% in the same period. This equates to an increase of almost £180 per month, said Rightmove’s research.

“The wide gap that has been created between supply and demand over the last two years will take time to narrow. Until then, this imbalance will continue to support asking rent growth,” said Tim Bannister, Director of Property Science at Rightmove.

For this reason, Rightmove expects rental prices to grow by a further 8% before the end of the year, up from the 5% predicted growth at the start of 2022.

Another story of supply and demand

Like the driving force behind the rise in property prices, supply for rental properties has outstripped demand.

“The story of the rental market continues to be one of high tenant demand but not enough available homes to meet that demand,” said Bannister.

Compared to last year, rental demand is up 6%. Meanwhile, the amount of available rental properties over the past year has shrunk by over a quarter.

However, there are signs that availability is easing. Since the beginning of the year the number of new listings is up 8%.

London rental prices break records too

London saw the highest rental growth of any region in the UK. Average rental prices are now over £2,250 per month in the nation’s capital, with annual growth almost reaching 16%.

This has largely been due to growing demand for accommodation, with office workers, international students, and corporate tenants returning to London, according to Richard Davies, Managing Director at Chestertons, an estate agency.

“This has created an extremely competitive market for tenants where many offer landlords over asking price in order to secure a property,” he further explained.

While prices may have increased, London held the lowest average landlord yield compared to other regions. The North East, which includes cities such as Newcastle, recorded the highest average landlord yield at over 8%.

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