UK rental market sees sharp rise in demand for one bed flats

Rent rises for one bedroom flats in the UK accelerated sharply in September, sparked by high demand from recent graduates renting to live near their first job, new research has found.

Rents for one beds saw an annual rise of 3.9%, from 2.9% in August, reaching an average of £1,054 according to the monthly Landbay Rental Index.

The new index, which launched last month, is the first to track rental trends to the county and London borough level in combination with the number of bedrooms.
 
Edinburgh with a rise of 12%, Swindon up 11% and Southend on Sea also up 11%, saw the biggest rises in rents for one bed flats, albeit from lower average rents than some of the other areas to see big year on year increases. 

The index also shows that rents for three bed properties are seeing the biggest overall rental rises, up 4.8% year on year to £1,489 in September.
 
Across all properties, UK rents rose by 3.7% in the last year to an average £1,288. This was the first increase in annual growth since February, when the average monthly rented price was £1,277.
 
‘The upward trend in UK rents can simply be explained with one word, jobs. The UK’s job market is going from strength to strength and the rental market is staying hot on its heels,’ said John Goodall, chief executive officer of Landbay.
 
‘The sharp seasonal jump in rental growth for one beds reflects a buoyant graduate job market as people move to their first job. Flexibility and freedom is the order of the day for first jobbers, and one bedroom flats offer the perfect springboard to take the plunge into full-time working life. One bed flats are also popular for couples and young professionals who don’t want to flat share,’ he explained.
 
‘Higher housing costs can be a nightmare for tenants when other costs are rising and their wages are stagnating. Fortunately these rent increases come at a time of growing wages and falling costs, according to the latest inflation figures, so while they may not be welcome they don’t leave the same dent in consumers’ pockets,’ he pointed out.
 
‘For potential investors, these rental figures show how resilient residential property is as an asset class, even when you have unusual economic forces combining like the current mix of low inflation, low interest rate, and high wages,’ he added.
 
Across all property sizes, the top rental risers outside of London were in the southeast, with all but two of the top 10 rental risers of Swindon and Edinburgh, clustered around London.
By contrast only one of the top 10 rental fallers, Buckinghamshire, was located in the southeast.

According to Joe Macklin, director of index compilers MIAC, there is likely to be a small decline in data volume in the run up to Christmas and this will be monitored closely for its influence on the emerging trends.

The report also specifically looks at London and found that rents for one bedroom flats average over £1,000 a month in 73% of London Boroughs and only nine London Boroughs have average rents for one bed flats below £1,000 per month.

Kensington and Chelsea top the board for most expensive rents for one bedroom properties, averaging £2,275. To the south east of the city, Bexley offers the cheapest average one bedroom rent prices at £791, yet with annual rent increases of 9.8% in the borough among all properties, this price could soon reach over £1,000.

Across all bedroom numbers in London rents have risen 4.1% in the last year to an average of £2,057 in September.

'These figures will fuel the debate about whether London is becoming too expensive. The city is a victim of its own success as the magnetic draw of its jobs market and its vibrant culture mean that there is a constant supply of people willing to pay to live here,' said Goodall. 

'For potential investors, these rental figures show how resilient residential property is as an asset class even when you have unusual economic forces combining like the current mix of low inflation, low interest rate and high wages,' he added.