Despite the annual pace of rent growth easing slightly, average asking rents outside the capital hit a new record this quarter, according to the latest data released by Rightmove.
Average asking rents for new tenants outside of London now stand at £1,231 per calendar month, a new record according to Rightmove who report that this figure is now 33% higher than at this time in pre-pandemic 2019, increasing by more than £300 from £923 pcm.
By contrast, average asking rents for new tenants outside of London rose by just £71 (8%) in the four years previous between 2015 & 2019, highlighting the rapid increase in new asking rents as tenant demand has increased and the number of properties available to rent has been steadily squeezed since the pandemic.
Although the yearly pace of rent increases for new tenants continues to slow marginally, it remains near double-digit levels.
It’s a similar story in the capital, with average asking rents in London reaching a new record of £2,567, and while the pace of rent growth has slowed slightly, it remains in double-digits for the seventh consecutive quarter. London rents are now 28% higher (+£559 pcm) than at this time in 2019.
Despite quickly rising prices, rental homes are continuing to let at speed and many landlords are still being met with long queues of prospective tenants wanting to view and rent their property.
The current average time to find a tenant for a home to rent is 17 days, its quickest since November 2022.
Tenant demand continues to exceed even last year’s frenetic levels and is currently 3% higher than at this time in 2022 and 42% higher than in June 2019.
The gap between supply and demand has slightly narrowed compared to last year, with available properties to rent up by 7% compared with June 2022, though this figure remains 42% below 2019.
Meanwhile, landlords are currently facing challenges from multiple directions. Government sentiment towards the industry (47%), rising taxation (41%) and increasing compliance requirements (33%) topped the list of landlords’ concerns in a recent study by Rightmove. 25% are also concerned about the rising cost of buy-to-let mortgages.
This is leading some landlords to sell up. 16% of properties currently for sale were previously available on the rental market, a figure which is up from 13% in January 2019. The data suggests landlords are particularly concerned about their properties with a lower EPC rating, ahead of proposed changes to EPC requirements from the government.
33% of landlords who own lower EPC-rated properties plan to sell them rather than make improvements to their EPC rating, compared with 20% who planned to sell last year.
However, despite these challenges, landlords value having a good tenant in their homes and are determined to keep good tenants for longer.
57% of landlords said that on average, tenants choose to stay in their properties for longer than 24 months, with only 8% saying they stay for a year or less.
Rightmove’s Tim Bannister, said: “The number of available properties to rent continues to improve compared to last year’s record low levels providing tenants with more choice, though, with a long way to go to catch up with pre-pandemic levels of stock, there will continue to be more tenants looking to move than properties for them to move to for a while yet.
"Average asking rents for new tenants have risen at a rapid pace since the pandemic reflecting the significant increase in demand, which is driven by a combination of factors including changed housing needs, such as some space to work from home.
"Landlords are currently having to navigate a multitude of challenges, but the data suggests it remains important to build long-term relationships with good tenants, with the majority of tenants choosing to stay in their property for longer than two years.”
Allison Thompson, National Lettings Managing Director of Leaders Romans Group said: “The themes dominating the lettings market continue to be low supply and high demand - an expansion in the number of people looking to rent, rather than landlords selling up en mass.
"Some highly leveraged landlords are considering selling due to interest rate rises but we find most are mortgage-free, and in most cases, our advice is to avoid a knee-jerk reaction. Interest rate rises are likely to reverse in early 2024 and in the meantime, the almost total absence of voids helps counter increased mortgage costs.”
Lynne Lancaster, Head of Estate Agency at Penrith Farmers and Kidd’s said: “The rental market in Cumbria remains very strong and shows no signs of retracting. We’ve listed the same number of properties to rent compared to last year, and the volume of enquiries and number of viewings has increased by at least 20-30% in some areas.
"Demand continues to well outstrip supply and we are actually seeing more tenants stay put for longer rather than move after the agreed term.”