The average cost of rent outside of London now stands at £1,068 per calendar month (PCM) – a massive jump after rental growth slowed during the start of the pandemic. According to quarterly figures from Rightmove, this amounts to an annual growth of 9.9 percent. The areas with the fastest increase in prices were found to be Wales (up 12.7 percent), the North West (up 12.5 percent) and the South West (up 11 percent). Smaller towns and coastal areas have seen a particularly rapid rise in prices with Littlehampton, West Sussex experiencing average rent rises of 17.5 percent and Ascot, Berkshire up 18.8 percent.
London, meanwhile, has seen rent increase by 6.1 percent which still brings it a new record high of £2,142 pcm.
Tim Bannister, Rightmove’s director of property data, explained: “2020 was defined by the race for space outside of cities, as tenant priorities changed and many moved further out looking for a larger property with green space, or temporarily moved back in with family.
“London was perhaps the biggest example of this, where landlords significantly decreased asking rents by the end of the year to encourage tenants to stay in the capital.
“A year on, asking rents have finally risen beyond pre-pandemic levels, a sign that the capital has not lost its pull and popularity with renters as landlords look to renegotiate previous cut-price terms.”
While tenant demand has soared, rental stock remains low and has failed to keep up.
According to Rightmove, demand has risen by 32 percent compared to this time last year while the number of rental properties available is 51 percent lower.
Flats in particular have seen high levels of competition among renters and, across the industry, properties are typically being rented out in just over two weeks.
The resulting soaring prices have come as good news to landlords who have seen rental yields hit nearly their highest levels since 2016 – at 5.5 percent.
According to landlord insurance provider Simply Business, landlords are increasingly seeing the highest yields outside of London with Birmingham, Bristol and Leicester topping the list of cities to invest in.
Marc von Grundherr, director of estate and lettings agent Benham and Reeves, said: “The surplus of available rental stock that accumulated due to the pandemic has now plummeted and this has been driven by a staggered return to the workplace and, in particular, a huge influx of demand from overseas students.
“We’ve also seen a huge increase in the number of tenancy renewals which have even exceeded 2019 levels and so while some areas are yet to see rental values return to the pre-pandemic norm, it’s only a matter of time as the market looks set to continue to this strong return to form throughout 2022.”
With tenant demand continuing to surge, Rightmove predicts further increases of average asking rents by five percent in 2022.
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The surge in rental costs comes as UK households are set to face a growing crunch on the cost of living this year.
Inflation has soared in recent months, stretching budgets on food and shopping, with increases in National Insurance and energy bills also set to hit in April.
This week, charity Citizens Advice warned of increased numbers seeking help with debt on essential bills, with 280,000 in England and Wales getting one-to-one help in 2021.