Countrywide Lettings Index - October 2016

Countrywide Plc

Monday, November 14, 2016

Number of tenants with a spare bedroom halves as affordability bites

• Just one in three (35%) new tenants in 2016 rented a home with a spare bedroom, down from 59% in 2010. (see table 1)

• London has seen the biggest fall in new tenants with spare bedrooms, from 61% in 2010 to 26% today.

• The cost of renting an extra bedroom is £295 a month, up 14% over the last five years. (see table 2)

• Rental growth continues to slow across Great Britain, driven by the South of England, year- on-year average rents increase by 1% nationally (see table 3).

The number of tenants with a spare room has fallen to the lowest level on record. Just one in three tenants (35%) let a home with a spare bedroom in 2016, down from a peak of 59% in 2010 (see table 1). In London, where rents are highest, just 26% of tenants were able and willing to pay for an extra room this year, slightly down on 2015 (see chart 1). As rising rents have pushed the cost of an extra bedroom to £295 a month (see table 2) tenants have increasingly shied away from paying for space they don’t absolutely need.

Renters in the capital are least likely to have a spare bedroom, but the figure is very similar for tenants in big cities across the South of England. Fewer than three in ten tenants in Oxford (28%), Cambridge (27%) and Bristol (24%) have a spare room (see table 2). But in cities further north like Newcastle, Manchester and Liverpool where the cost of an extra bedroom is much lower, tenants are nearly twice as likely to have a spare room (see table 2). Those living in city centre flats are a third more likely to have a spare room than their more suburban counterparts.

The cost of a new let rose 1.0% across Great Britain in the last year (see table 3), the slowest October increase since 2010. London and the South East continue to bear the brunt of the slowdown with rents in the capital up just 0.2% over the last 12 months while in the South East they fell 3.0% year-on-year. In October 2016, the average monthly London rent stood at £1,302 compared to £1,300 last year. The Midlands, North and Scotland saw rents up by more than 2.0%.

Commenting, Johnny Morris, Director of Research at Countrywide said: “As affordability pressures have risen, for many tenants, extra space has become a luxury. Sacrificing extra bedrooms and sharing has helped renters to absorb higher prices. But those living in the South are close to a point where there’s not much more room to squeeze, meaning rental growth is likely to be capped by tenants incomes for some time.

“The second half of 2016 has seen the rental market slowly swing towards the tenant. The pace of rental growth has slowed throughout the year. October was the first time in over two years the cost of renting a home didn’t rise faster than the rate of inflation.”

 

Chart 1 - Tenants with a spare bedroom

 

 

 

 

Table 1 - Tenants with a spare bedroom

 

 

 

Table 2 - Tenants with a spare room and cost of an extra bedroom

 

 

 

Table 3 - Average monthly cost of a new let

 

 

 

Table 4 - Average monthly cost of a renewed tenancy

 

 

 

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