The average rent for a one bed property in the UK increased by 0.1% month on month to over £1,000 in August and are up 1.7% year on year, according to the latest index.
But the nationwide figure is being skewed by growth in London as the average one bedroom rent when the capital city is excluded from the calculation is just £588, according to the data from the Landbay rental index.
The data also shows that for all property types the average rent increased by 0.12% month on month and 1.83% year on year to £1,186. But when London is excluded it is a month on month rise of 0.2% and year on year 2.29% to an average of £745.
Indeed rents in London are falling, down 0.01% month on month to £1,892 although they are still 1% higher than a year ago. In England rents are up 0.12% month on month and 1.84% year on year to £1,218 but are much lower in Scotland at £718, a 0.22% month on month rise and up 1.82% year on year. While in Wales rents are up 0.04% month on month and 1.41% year on year to £631.
There are signs however, that rental pressure is easing on tenants, as one bed rents grew by 0.1% last month, and 1.7% over the last year, behind wage growth of 2.4%. But in London, the proportion of monthly income spent on rent is significantly higher. The average rent for a one bed was £1,461 in August, compared to an average disposable income of £1,967.
The index report points out that for someone living in a one bed property in the capital, that’s amounts to 74% of take home pay going toward rent. Outside of London, this proportion is significantly lower, with just 41% of post-tax income handed over to the landlord each month.
Rents for other sizes of properties are still rising. For a two bedroom property overall in the UK average rents are £1,149, up 0.12% month on month and 1.78% year on year. But when London is excluded it is £703, a monthly rise of 0.2% and annual rise of 2.29%.
For three bedroom homes the average rent is £1,313, a month on month rise of 0.18% and year on year rise of 2.07% but excluding London this falls to £810, a monthly increase of 0.21% and annual increase of 2.28%.
‘The buy to let market is a vital part of the UK’s housing mix, and rental properties have become an important stepping stone for first time buyers saving up for their own home,’ said John Goodall, chief executive officer of Landbay.
‘However, with a rapidly growing population and a chronic undersupply of new houses, property prices are growing even further out of reach for aspiring home owners. With rents climbing too, even in the face of Brexit uncertainty, tenants saving up for a house face a triple challenge in trying to catch up with the pace of house price inflation, with more and more of their income spent on rent, and record low interest rates limiting their ability to save money,’ he explained.
‘With a new Prime Minister, a new chancellor, and a new London Mayor, bold new steps should be taken to fix the UK’s housing crisis. It must be high on the agenda at the upcoming Autumn Statement, especially given that rising rents are partly due to stamp duty increases being passed on renters. Phillip Hammond’s fiscal plan should also give more support to savers struggling to find a rewarding home for their money in this protracted period of record low interest rates,’ he added.
