UK rents have hit a seven-month high ahead of the busy summer period, with the north west of England seeing the biggest annual rise.
Competition remains rife within the rental market among tenants, as they continue to outnumber the quantity of properties available to let in many parts of the country. This, along with many landlords raising prices to recoup their additional mortgage costs, has led to another average rent rise.
The latest rental index from Goodlord has revealed that the average cost of a rental property has risen to £1,183 in May, up by 1.4% compared with April’s £1,166 figure. This is the highest average rent seen since October last year, when the cost of new lets peaked at £1,190 per month.
Summer is traditionally a very busy time in both the sales and lettings market, and this could especially be the case this year as the wider economic situation and general market sentiment has continued to improve since the start of the year. This rise could therefore be the start of an ongoing upswing.
On a monthly basis, the West Midlands has seen the biggest surge in average rents, with a rise of 4% since April. The city of Birmingham has seen a huge amount of investment and regeneration in recent years, as the population in the city has grown, and a big proportion of these new inhabitants are in the private rented sector.
The north west saw the second biggest monthly rent increase, of 2%. However, this region leads the way when it comes to annual rental growth.
A year of growth for the north west
On an annual basis, rents in England are now an average 6% higher than they were in May 2023, according to Goodlord. This reflects the wider inflationary landscape, as interest rates have remained at 5.25% since last summer and many landlords have had to remortgage onto much higher rates than before.
Another side to the story is the growth of the build to rent sector, as well as the rise in popularity of more high-end rental offerings for young professionals in city centres, which command higher prices. Many new rental developments come with additional amenities such as shared spaces, concierge services and outdoor areas, for example.
Like Birmingham mentioned above, Manchester in the north west is another city that continues to attract a high level of investment to cater for its growing population, which includes a major focus on creating more homes within the rental market to cater for the high proportion of private tenants in the city.
Goodlord’s research shows that the north west has seen the biggest annual growth in rents, rising by a huge average 8.1% over the past year. The average rental cost in the region is now £960, up from £888 in May 2023.
Where are rental homes snapped up the fastest?
When looking at average void periods – the number of days a property sits empty between tenancies – there are some wide variations across the country, but overall the average void period has risen by 10.5% both on a monthly and an annual basis. The average void period in England is now 21 days.
Greater London has the fastest rental market, where homes only sit on the market for an average of 18 days before a new tenant moves in. The longest void periods, according to Goodlord, can be found in the West Midlands, at 25 days.
However, the north west is the only region to have seen void periods decrease year-on-year, from 20 days in May 2023 to 19 days this month (-5%). This reflects the increased tenant demand in the north west over the past year, which has also contributed to its rising rents.
A busy season ahead
William Reeve, CEO of Goodlord, says: “This month’s data may well have signalled the starting gun on summer price escalations. The coming months are traditionally the busiest season for the rental market and the time when rents peak.
During 2024 so far, year-on-year rent rises have been fairly consistent – hovering around the +6-7% mark. Rental averages broke the £1,350 per month barrier for the first time in the summer of 2023.
“That means, if this 6-7% year-on-year trend continues, we could be seeing our first £1,400+ rental average being recorded in just a few months time.”
BuyAssociation specialises in connecting investors with developers in some of the best performing locations in the UK, with the north west being a primary target at the moment. Get in touch today for details.
