Rental Growth in the UK Property Market!

Annual rental growth strengthened for the third month running, with average rents up 7.9% across Great Britain at the same time last year.  Rental growth was led by Scotland where rents on newly let homes, which are exempt from the price freeze introduced in September, rose by 12.3% over the last year (table 2).  This rate is faster than any other region in Great Britain or at any time since the Hamptons Lettings Index was launched in 2012.

In the capital, the average Outer London rent rose 8.9%, passing the £2,000 PCM mark for the first time.  Meanwhile, the annual pace of Inner London rental growth softened to 20.4% (table 2).  Here, the falling pace of growth reflects rents having fully recovered back to where they were before the pandemic, with any further rises pushing rents to record highs.

Aneisha Beveridge, Head of Research at Hamptons, said: “Rising rents are tempting landlords to dip a toe back into the slowing sales market to try and pick up deals they couldn’t have got six months ago. With sellers more open to negotiation and rents rising rapidly, returns for equity-rich landlords have been rising.  While we’re unlikely to see landlords return to buying at pre-stamp duty surcharge numbers, it’s possible they may outnumber first-time buyers in some months next year, as was common before 2016.

“While house price growth is slowing, rental growth continues to strengthen, offsetting some, but not all, of landlord’s increased costs.  It’s these rising costs that are likely to mean rental growth will remain high for the next few years.  In Scotland, where landlords are capped in their ability to pass on higher costs to sitting tenants, rents on newly let properties will likely continue topping the growth charts.  When a tenant leaves and a home is re-advertised, the jump back up to market rate is much larger.”

Table 2 – Rental growth on newly let properties

Region

Nov-21

Nov-22

YoY %

YoY £

Greater London

£1,944

£2,160

11.1%

£216

Inner London

£2,329

£2,805

20.4%

£476

Outer London

£1,870

£2,037

8.9%

£167

East of England

£1,104

£1,153

4.4%

£49

South East

£1,262

£1,292

2.4%

£30

South West

£1,027

£1,105

7.6%

£78

Midlands

£775

£852

9.9%

£77

North

£741

£815

9.9%

£74

Wales

£755

£748

-1.0%

-£7

Scotland

£744

£836

12.3%

£92

Great Britain

£1,133

£1,222

7.9%

£89

Great Britain (Excl. London)

£924

£982

6.3%

£58

Source: Hamptons

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