Countrywide plc Monthly Lettings Index – January 2016

Countrywide Residential Lettings

Tuesday, February 16, 2016

Slowest rental growth for three years but average UK rents 12% above pre-recession peak

 The Countrywide monthly Lettings Index for January has found that compared to the same month last year average rents in the UK rose 1.2% to £906 a month(Table 3). While this represents the slowest increase in three years, average rents are 12% above their pre-recession peak, reaching the highest level on record. Unsurprisingly, London has seen the largest growth in rents anywhere in the country since 2007, with rents 34% higher than their pre-recession record. Between 2007 and 2016 the average Londoner has seen their rent rise from £966 to £1,295 a month(Table 1).

Despite the popular narrative of ever rising rents, over the past nine years the majority of the country has experienced rents growing steadily in line with incomes. Average income has increased by 12%*1 since 2007 according to the ONS compared to a 12% increase in average rents.

However, the rental market adheres to a classic North/South divide. In the North West, North East and Wales the average tenant is still paying less than they were in 2007 by £12 a month. Across the UK as a whole, one in five tenants is still paying less rent than they were in 2007(Table 1). In London rents have grown well beyond incomes. Incomes have only increased by 10% since 2007 in the Capital whilst rents have grown by 34% fuelled by a lack of supply and high demand. As a result tenants have had to either share, downsize or move further from the centre in order to accommodate this rise.

At current rates of rental growth the three regions where rents remain below their previous peak will see average rents surpass 2007 levels by the middle of 2016. In these regions landlords have increasingly looked to renegotiate with long term tenants, some of whom have enjoyed years without any increase in their rent. This January more landlords were able to increase the rent for tenants who renewed their contract in the North East, North West and Wales than at any time since 2012.

In 2007 the average monthly rent for a home in the UK peaked at £809(Table 1) before the recession hit. Between the end of 2007 and 2008 the average cost of renting a newly let home fell 11%, equating to a fall in the average monthly rent of £87. This brought the cost of renting the average home down to £720. It wasn’t until the start of 2010 that rents started rising again.

*1 ONS Figures 2007 -2015

Commenting Johnny Morris, Research Director at Countrywide said:

“Nationally rents in January rose at the slowest rate since 2012, as some of the upward pressure on prices subsided and affordability limited further rises. Across most of London and the South East the slowdown in rental growth is the first since 2010, where rents have been growing for the past 6 years.”

“The most sustainable way of creating a more affordable rental market in London and the South is by building more homes of every tenure. Unlike in the US where institutional investors build homes to rent, in the UK the sector is dominated by small landlords meaning the link between new homes getting built and the rental market isn’t nearly as close as it should be.”

The Countrywide Lettings Index for February will be released on Friday 11 March under embargo for publication on Monday 14 March  

-ends-

 

 

Table 1: UK Rents relative to their 2007 peak

 

Region

2016 Rent

2007 Rent

Proportion of peak

Year rents surpassed 2007 peak

Greater London

£1,295

£       966

134%

2011

South East

£1,096

£       906

121%

2012

East of England

£941

£       833

113%

2012

West Midlands

£690

£       611

113%

2013

UK

£906

£       809

112%

2014

South West

£797

£       718

111%

2014

East Midlands

£637

£       590

108%

2013

Yorkshire & Humber

£627

£       586

107%

2013

Scotland

£654

£       611

107%

2014

Wales

£580

£       586

99%

-

North East

£607

£       613

99%

-

North West

£646

£       666

97%

-

Source: Countrywide Research

 
 

 

Table 3: New Lets

Region

Ave Rent Jan-16

Ave Rent Dec-15

Ave Rent Jan-15

January Rent YOY

January Rent MOM

Greater London

£1,295

£1,283

£1,265

2.4%

0.9%

Central London

£2,461

£2,628

£2,350

4.7%

(6.4%)

East of England

£941

£938

£870

8.2%

0.3%

South East

£1,096

£1,132

£1,125

(2.6%)

(3.2%)

South West

£797

£818

£797

0.0%

(2.6%)

Midlands

£664

£641

£647

2.6%

3.6%

North

£633

£621

£626

1.1%

1.9%

Scotland

£654

£648

£658

(0.6%)

0.9%

Wales

£580

£663

£666

(12.9%)

(12.5%)

Total

£906

£912

£895

1.2%

(0.7%)

 

Table 4: Occupied units

Region

Ave Rent Jan-16

Ave Rent Dec-15

Ave Rent Jan-15

January Rent YOY

January Rent MOM

Greater London

£1,198

£1,196

£1,137

5.4%

0.2%

Central London

£2,412

£2,449

£2,448

(1.5%)

(1.5%)

East of England

£865

£862

£829

4.3%

0.3%

South East

£998

£997

£984

1.4%

0.1%

South West

£737

£737

£724

1.8%

0.0%

Midlands

£631

£629

£621

1.6%

0.3%

North

£624

£624

£612

2.0%

0.0%

Scotland

£640

£641

£626

2.2%

(0.2%)

Wales

£651

£650

£641

1.6%

0.2%

Total

£857

£857

£836

2.5%

0.0%

 

To find out more, please contact: 

Countrywide plc

Group Press Office

Tel: +44 (0) 7721 439043

Email: press.office@countrywide.co.uk Visit: www.countrywide.co.uk                                  

 

Notes to Editors:

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