Rents pass £1,200 pcm for first time

rents grow

In October, the average rent on a newly let home in Great Britain rose to £1,204 pcm, passing the £1,200 mark for the first time (table 1, chart 1).  This has cost the average tenant an extra £960 per year in rent compared to last year.

Average rents passed the £1,100 mark back in September 2021, just 14 months ago.  Meanwhile rents first crossed the £1k milestone back in June 2019, before dipping during Covid and re-passing that point again in August 2020, 15 months later (chart 1).

So far this year, average rents in five regions have moved into a new £100 price bracket.  Greater London was the latest, with rents passing £2,100 pcm for the first time in October 2022 (table 1).  This was driven by rents in Inner London reaching a new record high of £2,863 pcm in October, £1 pcm more than when rents in London’s priciest postcodes previously peaked (in October 2019).  This now means that rents in every area of the country are above where they were at the beginning of Covid (table 1).

Chart 1 – When the average monthly rent on a newly let home in Great Britain passed a £100 mark

Source: Hamptons

Since the eve of Covid (Jan-2020) rents have risen 19% across Great Britain, equating to an additional £2,351 a year in rent.  We’ve seen more rental growth since the beginning of Covid than we did in at least eight years prior.  While nationally rents recovered to their January 2020 levels within eight months, in Inner London it took 30 months to bounce back.

In October, the average Inner London home cost 9% more to rent than it did in January 2020.  Meanwhile the South West has seen the strongest growth since then, with rents up 32% or £265 per month (table 1).

Table 1 – Rental growth on newly let properties

Region

Last £100 pcm band passed

Average Rent

Oct-22

YoY

%

YoY

£

Growth since Jan-20

Greater London

£2,100

Oct-22

£    2,111

11.0%

£    209

15%

   Inner London

£2,800

Sep-19

£    2,863

27.0%

£    609

9%

   Outer London

£1,900

Sep-22

£    1,973

7.5%

£    138

17%

East of England

£1,100

Apr-22

£    1,144

3.4%

£      37

15%

South East

£1,200

Jun-21

£    1,249

0.5%

£        6

18%

South West

£1,000

Sep-21

£    1,097

6.9%

£      72

32%

Midlands

£800

Mar-22

£       851

9.5%

£      74

22%

North

£800

Sep-22

£       815

8.0%

£      61

27%

Wales

£700

Mar-21

£       756

1.5%

£      11

14%

Scotland

£800

Jul-22

£       822

8.8%

£      67

26%

Great Britain

£1,200

Oct-22

£    1,204

7.1%

£      80

19%

Great Britain (Exc. London)

£900

Aug-21

£       972

5.2%

£      48

22%

Source: Hamptons

Rapid rental growth over the last few years means that the average privately rented household in Great Britain is now spending 44.0% of their post-tax income on rent, the highest share since our records began in 2010 (chart 2).  Two years ago, the average tenant spent 41.6% on rent, up from 39.2% in October 2012.

London remains the least affordable region, with the average rent taking up 62% of the average renting household’s post-tax income.  However, weaker rental growth in the capital means that this has increased by just 1% since October 2020, the third smallest rise in the country (chart 2).

Chart 2 – Proportion of tenant households’ post-tax income spent on rent

Source: ONS & Hamptons

The pace of rental growth across Great Britain has stabilised in recent months, with rents up 7.1% year-on-year in October (table 1).  This marked the fifth consecutive month of single-digit increases after annual rental growth peaked at 11.5% in May 2022.

Stock levels crept up for a second consecutive month, meaning there were 15% more homes available to rent in October 2022 than in October 2021.  However, this increase compares to a period when stock levels were at record lows and there are still 47% fewer homes available than two-years ago.

London is now the only region where there are fewer homes available to rent than last year.  This coincides with a 11.0% year-on-year increase in rents, driven by Inner London’s recovery where rents rose 27.0% year-on-year.