Rental Growth Surges: Average Monthly Rent Exceeds £1,000 Outside London

In an unprecedented development, strong rental growth has propelled the average monthly rent for newly let properties outside London to a staggering £1,002 in April, surpassing the long-awaited £1,000 mark. This groundbreaking revelation comes from the latest findings of the Hamptons Lettings Index, which utilizes data from the esteemed Countrywide Group to meticulously track changes in rental costs. Astonishingly, this milestone has been achieved in less than three years (34 months) since the entire nation of Great Britain, including London, last witnessed the same extraordinary rental figures back in July 2020.

Over the course of the past year, average rents beyond the capital have surged by 7.8%, catapulting them to a remarkable 26% higher than pre-pandemic levels in February 2020. This means that tenants seeking new homes outside London will now face an additional £868 annually in rental expenses.

The £1,000-per-month threshold has been surpassed in three out of the ten regions located outside the bustling streets of London, specifically the East of England, South West, and South East.

Remarkably, when the Hampton Lettings Index was first introduced back in February 2013, tenants moving into new homes outside London were paying an average of £677 per month, which is an astounding £325 less than the figures recorded in April 2023. Over the years, average rents in these regions have soared past four significant £100-per-month milestones, three of which were accomplished since the onset of the Covid-19 pandemic. In fact, it was just 21 months ago, in August 2021, that the £900-per-month benchmark was triumphantly conquered.

On a national scale encompassing the entirety of Great Britain, average rents experienced a remarkable 11.1% year-on-year surge in April, culminating in an all-time high of £1,249 per month. This surge in rental prices marks the second most robust month for rental growth across the country, second only to the remarkable annual increase of 11.5% recorded in May 2022.

In the grand scheme of things, rents have skyrocketed by an astounding 25% since the arrival of the Covid-19 pandemic, effectively costing the average tenant an additional £2,962 each year.

As expected, the capital city, London, continues to showcase the most robust rental growth. In April, the average monthly rent for a newly let property in Greater London soared to an impressive £2,210, indicating a substantial 17.2% increase compared to the same period the previous year. Furthermore, April 2023 marked a historic occasion as it became the first time that the average monthly rent in the capital surpassed the £2,200 mark. Consequently, tenants planning to relocate to new rental homes in London can expect an extra financial burden of £3,895 per year.

Inner London has consistently fueled the momentum of rental growth, with the average monthly rent breaching the £3,000-per-month milestone for the first time in March 2023, reaching an impressive £3,047.

In April, the average rent in Inner London climbed even higher, reaching £3,138 per month. This figure represents a striking 24.9% increase, amounting to an additional £625 per month compared to the same period the previous year. Consequently, the gap between Inner and Outer London rents has significantly expanded to £1,104, a notable 54% increase from its post-Covid low of just £221 in June 2021.

The upward trajectory of rental prices in outer London continues, as it recorded double-digit growth for the third consecutive month. In April, rents in the area surged by an impressive 15.1% year-on-year, with a significant milestone reached in November 2022 when rents crossed the £2,000-per-month mark for the first time.

However, despite this remarkable performance, rental growth in London as a whole has lagged behind most regions in the country. Since the onset of the Covid-19 pandemic in February 2020, average rents in inner London have risen by 21%, while in outer London, the increase stands at 22%. Notably, the South West, North West, and North East regions have experienced the strongest growth, with rents soaring by 31% during the same period.

The previous month saw average rents reach new records in seven out of the 11 regions in Great Britain. Only Wales, the South West, and the North East observed average rents that remained slightly below their peak. Following a similar pattern to London, Scotland also witnessed double-digit rental growth (12.8%) in April for homes rented by new tenants.

Aneisha Beveridge, the head of research at Hamptons, shared her insights on the situation, stating, "It was in July 2020 that the average rent across all of Great Britain, including London, last surpassed the £1,000 per month mark. However, just 34 months later, the soaring rents since the Covid-19 pandemic have pushed the average rent in regions outside of London to cross the same milestone. While rents experienced their second-largest annual rise in April, they have failed to keep up with wider inflation for nine out of the last 12 months."

As rental prices on the open market continue to rise rapidly, tenants are faced with the choice of either staying put or relocating to smaller and more affordable accommodations. While those who choose to remain in their current homes generally experience smaller rent increases compared to those moving elsewhere, they are not entirely immune to the upward trend. Affordability constraints are expected to eventually slow down rental growth, but the presence of landlords seeking to pass on their escalating costs suggests that the slowdown may not be significant.