Residential rents are continuing to grow across the UK with 20 areas seeing rises of more than 3% in the last year, according to the latest index report.
Luton is the area with the fastest growing rents with a rise of 6.5%, followed by Northamptonshire up 5.1%, Peterborough up 4.8% and Edinburgh up 4.6%, the Landbay rental index shows.
Other areas of high rental growth include Medway up 4.5%, Bedfordshire up 4.6%, Thurrock up 4.4%, Bristol up 3.62%, Swindon up 3.31%, Nottingham up 3.25%, Leicester up 3.1%, and Greater Manchester up 3.06%.
In the UK as a whole the average rent is now £1,189, up 1.08% year on year and 0.06% month on month, but excluding London it is £750, up 1.92% and 0.12% respectively. However, in London while the average rent is £1,883, this is down 0.42% year on year and down 0.04% month on month.
In England the average rent is £1,221, up 1.06% year on year and up 0.06% month on month. In Scotland it is £721, up 1.26% year on year and up 0.08% month on month while in Wales it is £635, up 1.43% year on year and up 0.15% month on month.
The index report says that in the 20 locations with annual rental growth of more than 3% such growth is further stretching the affordability of renting a home in these areas and reckons that rental growth is reaching unsustainable levels in the top 20 growth areas which should now be the prioritised focus for Government, developers and landlords.
The recently launched Government Housing White Paper highlighted the growing proportion of income tenants are currently spending on rent, sending roughly half their salary to their landlord each month.
Landbay’s analysis has found that tenants in nine of the 20 areas with the fastest growing rents are currently spending over 60% of their take home pay on rent. A tenant in Luton for example, currently spends an average of 68% of their disposable income on rent, with tenants in Brighton and Hove, Bristol and Thurrock spending an average of 69%, 64% and 63% respectively.
‘There are currently 4.3 million tenants in the private rented sector but affordability is becoming an issue across many parts of the UK. Whether tenants are renting as a stepping stone on the way to home ownership or, increasingly, renting for life, people rely on a well-served buy to let market to ensure rental growth doesn’t become unbearable,’ said John Goodall, Landbay chief executive officer.
He pointed out that Government attention has tended to focus on regulating so called ‘accidental’ landlords but a step change in this week’s white paper to focus on supplying more rental properties suggests that the sector may finally be given the investment it needs to keep rents in check.
‘Further institutional investment in large scale developments, specifically designed to rent rather than buy, should go some way to professionalise the sector, improving living standards and helping control further rental growth,’ he explained.
‘While private rented sector schemes are already on the way in many of the areas facing the fastest pace of rental growth, the Government’s white paper missed an opportunity to highlight where in the country this type of investment is needed the most. For those in the top 20, experiencing rental growth above 3% a year, the clock is ticking,’ he added.
