Private sector tenants in London pay over 100% of asking rent
The average home in the UK is let for 99.9% of the asking rent, the highest such value since 2007, just before the global economic downturn, new research shows.
Overall the average UK rent is up 3.2% to £926 per month but the rate of growth is down from February 2015, the latest Countrywide monthly lettings index shows.
The report has identified a fall in tenants’ negotiating power when renting a new home. It has found that 12% of lets were agreed at more than the initial asking price over the last year, with the average tenant paying 99.9%.
But this figure is highest in London where the average let was agreed at 100.9% of the asking price while it was lowest in Wales at 98.7%.
One in five of those renting in London pay more than asked for to secure a home of their choice, far more than those outside of the Capital. This works out at an extra £94 a month over and above the asking rent against a UK average of £44 which, over the course of a typical 17 month tenancy, this equates to an extra £1,578 in rent for the average Londoner.
London has seen the largest growth in rents anywhere in the country since 2007, with rents 34% above their pre-recession record compared to12% across the UK as a whole. Despite these increases, the proportion of lets agreed at more than the asking price has risen in every year since 2008 demonstrating the continuing balance of power towards landlords.
In 2008 just 3.5% of deals were agreed at above the asking price while 23.5% of tenants were able to negotiate money off the asking rent. By 2016 the proportion of tenants able to renegotiate prices down has plummeted to 8%.
As was the case in 2015, rents are growing at the fastest rate across the South of the UK. The South East saw growth of 5.8%, the South West up 4.8% and Greater London up 4.2%, all above the UK average.
While the Midlands saw growth of just 1.1% and the North 3.8% with the report data also showing that there has been a slowdown in the top end as central London rents fell 8.4% year on year.
‘The combined effect of growing numbers of people renting and a lack of supply has seen tenants’ ability to negotiate diminish. Tenants are having to compete more often and with more people in order to rent the home they want, meaning they need to offer more money in order to push ahead of the crowd,’ said Johnny Morris, research director at Countrywide.