As we await the conclusion of Q4, Zoopla’s UK Rental Market report for Q3 offers insight to the state of the sector.
UK General Summary
- The average rent for the UK is £1,051 while it is thought that rental growth is nearing it’s peak at 12.3%
- Rural areas have seen rent increase by 8.5%
- The rental sector is still woefully undersupplied, and indicators suggest this will not change in the near future. As a result, rents will most likely rise, even in the face of a cost-of-living crisis.
- Stock levels for the rental sector vs the 5 year average are -46%
The South West Rental Market
The region remains one of the best rental markets outside of London. Excluding the capital and its commuter regions, the South West has the highest average rent (pcm) while property takes the least amount of time to rent out.
Rents rise far more slowly for non-movers
With the average renter moving every 4 years, it’s worth taking a look at data provided by the ONS rental index, which covers New Lets and the experience of 25% of people moving and renting a new home. It also covers those households who are moving, as well as those who remain in their current rental.
Compared to July 2021, all current rents across rented homes are 3.7% higher. On the flip side, people moving to a new rented property found the cost of renting 12.3% higher; new lets, and their rent, reflect the market conditions of available supply and current levels of demand.
As we are all too aware, the cost of living pressures continue and with increased rates of rental growth not hitting all renters equally, faster rental growth for new lets means more tenants will decide against moving and stay put. If this continues, it will intensify the squeeze on supply, which could well see increases to rents in to 2023
Renters are now seeking smaller homes and lower running costs
Using data provided by Zoopla there is strong evidence to suggest that renters are responding to current financial pressures by downsizing.
For instance, outside London the current difference for rents charged for a 2 bed flat and a 3 bed flat is £105 per month, an annual sum of £1,260. When you factor lower running costs for smaller homes, you can see why downsizing appeals in the current climate.
As cost-of-living pressures build, renters will be looking to balance the combined impact of rental and running costs as they make home-moving decisions. We expect the appeal of apartments and energy-efficient houses is set to rise further into 2023.
At Luscombe Maye we have developed a highly respected reputation amongst our clients and are acutely aware that letting property is a big decision. We firmly believe that you deserve to be supported by a team who are able to expertly guide you at every step. If you’re thinking about letting your property, get in touch with the team, or book your free no-obligation free market appraisal here.
Insight and Data provided by Zoopla and the ONS. Published 13 September 2022
