The Average Rental Cost is Now Nearly £1,000fjpinvestment
Following on from our post yesterday that more rental property is needed, the average rental cost in the UK has skyrocketed in recent times, mainly due to heavy demand from renters. Indeed, rents have increased by over 8% based on statistics for the last quarter of 2021, according to Zoopla. The 8.3% increase seen in this short time period amounts to the most repaid increase seen in the UK rental sector in the last decade.
When you get down to the numbers, they are quite revealing. For example, the average UK renter will now pay £62 a month more than they did in 2019, just prior to the pandemic, adding up to a hefty £969 each month being paid on rent alone. Furthermore, when taken over the whole year, this equates to renters paying £744 more than they did before the pandemic caused major disruptions all around the world.
As business locked down and social distance rules were put into effect, many workers had to quickly adapt and adopt new working practises like remote working away from the office setting, typically from home. As a result, many people had to think about their living arrangements and there was a big rise in the number of renters looking for new places to live.
Naturally, the steep rise in average rental cost will be worrisome to many individuals and families as they struggle to make ends meet with other rising costs like energy and food. On top of this, National Insurance contributions are also set to rise.
Another way in which rising average rental costs can adversely affect renters is those that are saving up deposits for their own mortgages and hoping to enter the property ladder. Along with rental increases, house prices have also soared, with the average price of a home in the UK reaching £276,759, an amount equal to a £24,500 increase over what it would have cost a year earlier, according to Halifax.
What areas have seen rent increase the most?
Figures clearly show that rental increases have affected every area of the UK. Set out below is the new data showing how much each region has been affected:
- London: London came out the highest with an annual increase of 10.3% and the average monthly rent being £1,640. Unfortunately, many young professionals are being priced out of the London rental market.
- Northern Ireland: NI came in at a 10.2% increase with the monthly rent being £646.
- Wales: Wales has also had a steep percentage rise, with 9.8% and the average rent being £686.
- West Midlands, Yorkshire and the Humber, the North-west, and East Midlands all came in within the 8% rental increase.
- South-east: came in at a 6.4% rental increase, with the average rent now reaching £1,089.
- Scotland: came in with the lowest increase with a 4.8% increase and the average monthly rent being £639.
As the pandemic shows further signs of abating, renters of all stripes, including office workers and students, along with other working professionals, are returning to the big cities, including London, Manchester, Leeds, and Birmingham. The so-called “race for space” resulted in many renters changing their living circumstances as many left the cities to work virtually.
In January 2022, demand for rental accommodation soared 76% higher compared to the previous three years in the same period. However, demand for rental housing has not met supply since there are nearly 40% fewer properties available on the rental market compared with last year.
Consequently, with demand far outstripping supply, the price of rental properties has been forced up with hot competition from renters in every region. Also, reflected in the intense competition between renters is the time it takes for a property to be let out, with an average of 2 weeks currently, down from 3 weeks in 2020.
The UK needs to step up its game on building new houses if we are to take on the challenge of turning around the juggernaut that is the housing and rental crisis. Taking advantage of investment and innovative technologies can help increase the build rate and reduce costs.