The average asking rent in the UK has hit a record peak, rising to a new high of £1,172 PCM in the final months of 2022, according to Rightmove’s latest data analysis. *
London once again led in the ranks, with the capital’s average rental price hitting a record of £2,480 a month, while rent in the inner city soared to an astounding £3,010 per month. In spite of this astronomical increase, Rightmove predicts that the average rent for newly available properties will continue to increase to a further 5% in 2023. *
Why are rents still increasing?
There is no single answer for the question of why rents are rising, as the pace of rental values growing is dependant on a combination of different factors.
Since 2019, the UK has seen a chronic imbalance between the supply of homes to rent and the level of demand from tenants. This dynamic encouraged competition between renters and in turn, hiked up rents.
In the post-pandemic market and the midst of a cost of living crisis, high rents can also be pinned down to high inflation, high employment and strong wage growth in recent years, especially in large cities like London.
Positive signs for supply growth
The scarce supply of available properties has been the leading driving force behind rental increases. However, although we are still early into the year, there are already a few positive signs that the clamp on rental supply may be starting to ease compared to the shockingly low levels of last year.
Rightmove’s data analysis also found that the final quarter’s rise of 0.9% for the number of available homes to rent was the smallest quarterly increase for two years when compared with the previous 3 months. The number of homes to rent on the market in December 2022 had increased by 13% compared with a year earlier, while the amount of people inquiring about rental properties rose by 7% over the same period. *
Rightmove’s director of property science Tim Bannister said: “Although the fierce competition among tenants to find a home is starting to ease, it is still double the level it was back in 2019. Letting agents are seeing extremely high volumes of tenant inquiries and dealing with tens of potential tenants for each available property.
“Landlords
will need to balance any rent rises with what tenants can afford to pay in their local area, to continue to find tenants quickly and avoid any periods where their home is empty due to tenants not being able to meet the asking rent. There appears to be some more property choice for renters compared to the record low levels of last year which would slightly ease the fierce competition to secure a home.
“This is why we’re forecasting that the pace of annual growth will ease to around 5 per cent by the end of the year nationally, although this would still significantly exceed the average of 2 per cent that we saw during the five years before the pandemic.”
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