In the first half of this year rents grew faster compared to the same period in 2013, according to the latest Countrywide Residential Lettings analysis of over 65,000 rental properties. Average UK monthly rents increased 4.6% over the past year, growing at approximately twice the rate of 2013. Unlike 2013, when rents grew most quickly across parts of Northern England, it has been Outer London and the East of England where rental growth has been fastest, the research suggests.
Countrywide’s research confirms the seasonal nature of the rental market. During the summer months, rents traditionally grow most rapidly as contracts are renewed; tenants begin their search for new property and student’s look for next years’ accommodation.
When it comes to age, so far in 2014, tenants aged 30 and under have accounted for 42% of new tenancies signed, down from 52% 12 months ago.
Conversely, those aged 40 and above now form 30% of tenancies, up from 25% a year ago. However, this change is likely to be short-term with those keenest to use the Help to Buy scheme having already done so and the fundamental lack of new housing supply means that the barriers to homeownership continue to grow.
Commenting on the findings Nick Dunning, Group Commercial Director, Countrywide plc, said: “The recovery in mortgage availability, Government Help to Buy scheme and improving sentiment in the housing market has seen a wave of tenants move into home ownership. This flow of tenants out of the sector saw demand for rental properties in many areas ease, resulting in below inflation rental growth in some areas in 2013. With changing conditions in the sales market meaning that many of those tenants looking and able to buy have already made their move, rental growth looks set to accelerate.
“Over the medium to longer term a lack of supply will increasingly put landlords in a stronger position to ask for, and achieve, higher rents. Significant upward pressure on rents will come from a lack of house building, particularly in London, the South East and other major conurbations with sound fundamentals experiencing population growth. Equally, any move by the Bank of England to raise interest rates will serve to push up mortgage costs, making it harder for those with smaller deposits, in particular, to get on the housing ladder. The single best way to alleviate upward pressure on rents is to build more affordable new homes, both for rental and for sale.”