UK Rental Growth Shows No Signs of Slowing Down, According to Hamptons

According to their findings, the cost of initiating a new tenancy has surged by 9.9 percent year-on-year across the UK, reaching an average of £1,282 per month.

The consistent upward trajectory in annual rents, having climbed over 5.0 percent for a remarkable 27 months consecutively and remaining above 7.0 percent for the past 10 months, highlights a sustained period of expansion. This extended growth phase has led to the average rent soaring by 28 percent compared to February 2020, just before the pandemic took hold.

Over the past year, London has maintained its position as the region with the swiftest rent hikes, experiencing a significant 13.9 percent increase in the average price of new lettings. A closer look reveals that London's rents have maintained a double-digit surge for 15 out of the last 17 months. However, the pace of growth in Inner London has tempered as rents have exceeded pre-Covid levels, aligning more closely with the trends seen in Outer London.

Reflecting on the onset of the pandemic, a noteworthy trend emerges - rental growth in the North has outpaced that in the South.

In the post-February 2020 period, while average rents in London and the South East have risen by 26 and 24 percent, respectively, the Midlands has experienced a more substantial 31 percent increase, and Northern England has seen a remarkable 33 percent surge. This rent surge can be attributed to more robust house price growth while yields have remained steady.

Aneisha Beveridge, the head of research at Hamptons, notes, “The influx of new properties onto the market continues to command record rents, and in the foreseeable future, it's challenging to identify factors that would significantly slow down this growth trajectory."

"Considering that approximately 35,000 landlords transition from fixed-rate mortgages each month, the upward pressure on landlords’ expenditures remains a driving force. Leading up to remortgaging, landlords strive to balance by reducing debt and increasing rents that have slipped below-prevailing market rates."