Average residential rents in the UK set new records

National average rents in the UK have broken records yet again, increasing 4% in August and 11% year on year to an 11 year high of £779. In London rents increased 2% last month and 8% annually and they are the highest in the country at £1,465.

The data from the latest Sequence lettings index, shows that renting is going from strength to strength with the number of new agreed tenancies reach a three year high, up 8% month.

Across the UK tenant demand is strong with new tenant registrations up 2% on July 2013 and 11% on August 2012. In London the number of tenants have increased 5%.

Also people are renting for longer. For example, the average length of a tenancy in London has increased from 12 to 18 months as people continue to be priced out of the sales market.

But the supply of new properties available to rent is flat on month, a stark contrast to levels of demand. This could lead to rental prices increasing even more.

‘August has been another record breaking month, with the number of new tenancies up 8% on last month and 17% annually. Average national rents are at their highest level for 11 years, but this has not deterred tenants, with demand up 2% on the month and 11% annually. The supply of new properties to the market has seen no change on the month and if this continues to be outstripped by demand then we will see further significant rises in rents,’ said Stephen Nation, head of lettings at the 300 branch Sequence Group which includes Barnard Marcus, William H Brown, Fox & Sons and other leading brands.

‘The London picture is very similar, with the number of people looking to rent increasing by 5% on month, but the number of new properties available decreasing by 1%. As a result of this competition rents in London grew by 2% on month and activity levels in the capital have been phenomenal, with new tenancies agreed rising by 12% both on month and annually,’ he explained.

The data also shows that buy to let mortgage applications have increased 31% annually as investors are attracted to high yields over low saving interest rates.

‘Buy to let mortgage applications are up 31% annually, the highest increase for over two years. This is in line with the Bank of England’s announcement that banks have lent a record £5 billion in the second quarter of this year, which indicates that buy to let has not relinquished its status as the investment of choice for those looking to bolster their savings returns,’ added Nation.

Nationally, both the number of viewings and new tenancies are at their highest levels since 2011. However, the number of new tenancies with a rise of 8% outpaced the number of viewings which were up 2%, a sign of the strength and competition in the market. As such, the ratio of viewings to every new tenancy decreased in August to 7.8/1 viewings to every tenancy from 8.2/1 in July.
In London, the ratio of viewings to new tenancies has decreased sharply to 11.6/1 from 12.6/1 in July. The firm says that this is because new tenancies agreed are up a substantial 12% on month, but viewings are down a significant 9%, again showing the competitive nature of the market where tenants are moving extremely quickly on their desired property.

In August new tenancies agreed have increased again on July’s record breaking month, by  8% monthly and 17% annually, the highest number of agreed lets for over three years. The rate of growth both nationally and in London has been significant with the capital city seeing both 12% monthly and 12% annual increases in new tenancies agreed, which outpaces the national market in terms of the rate of monthly growth.