East of England sees strongest annual rental growth in UK
The East of England is seeing residential rents rise almost four times the average for the UK with annual growth of 2.35% in July compared to a national rise of just 0.64%.
Strong demand for lower rent accommodation by long distance commuters is thought to be a contributing factor as people move further away from London. Indeed four of the hottest commuter hotspots are outside of the M25.
The latest index report from Landbay shows that rents in Luton, Peterborough, Thurrock, and Bedfordshire, are all less than half the London average, but have grown more than 3% in response to growing demand.
Rents have increased by 4.23% in Luton, by 3.75% in Peterborough, by 3.56% in Thurrock and by 3.19% in Bedfordshire in the last 12 months yet actual rents are less than half of the London average of £1,873.
In London rents have fallen by 1.05% year on year and the current pace of growth means a tenant in Luton is now paying £789 each month in rent compared to £757 a year ago, an extra £384 over the year.
The average UK rent is £1,193, up 0.06% month on month and 0.64% year on year. Excluding London rents increased by 0.13% month on month and by 1.56% year on year to an average of £756.
The data also shows that year on years have increased by 1.34% in Wales, by 1.23% in Scotland and by 0.18% in Northern Ireland to an average of £639, £726 and £560.
According to the report the figures highlight a growing affordability crisis for young people working in London, suggesting that many are moving further afield to reduce their rent burden, possibly while they save for a house of their own.
Less affordable areas in London’s commuter belt, those with higher average rents and particularly those in the South East, have seen less demand and therefore slower rental growth.
While the East of England has seen competition push up rents across the board, just three out of 19 counties in the South East have seen rental growth above 2%. With rises of 3.16% in Medway, 2.28% in Kent and 2.03% in West Sussex, these locations all have more affordable average rents, less than half the London average.
Indeed the two counties in the South East with the highest rents, Surrey at £1,439 and Windsor and Maidenhead at £1,270 have both seen rents fall by 0.13% and 0.23% respectively.
Elsewhere, already expensive areas surrounding London have seen far less rental growth. For someone in Windsor or Maidenhead, traditionally deemed as ‘desirable’ regions for commuters, rents have seen the biggest slowdown.
‘With rising inflation and rock bottom interest rates it is little surprise to see demand in the more affordable Home Counties rising faster than pricier parts of London and the South East,’ said John Goodall, chief executive officer of Landbay.
‘Naturally these surrounding areas are starting to experience a surge in rental prices, creating a ripple effect out from the capital. There are of course a number of factors at play, but as yields tighten in the capital landlords may well be branching out to the East of England in a bid to meet this demand,’ he added.