The rate of rent rises hits three-year high
UK rental growth rose to 2.6% annually in the last quarter of 2019, according to Zoopla.
The property portal said this was the highest rent of growth in three years, taking the average rent to £886 a month.
The rise in rents is partly because the supply of homes to rent has contracted by 4% over the last two years. It’s also been fuelled by demand for rented homes increasing by 8% over 2019.
Rents in London are rising even faster, at 2.8%, the highest level for almost four years, as the available supply of homes for rent in the capital has fallen by a massive 19% since 2017.
But the highest growth is seen outside the capital, with York +5.0%, Bristol +5.5% and Nottingham +5.8% all registering rental increase of over 5%.
Not everywhere is following the upwards trend, with three cities experiencing falls in rent in the last quarter – Aberdeen (-2.8%), Middlesbrough (-1.1%) and Coventry (-0.1%).
Richard Donnell, director at Zoopla, said: “A lack of supply and real wage growth is behind the increase in average rents across the country over 2019.
“New investment by landlords has fallen since the introduction of tax changes in 2016 and this has been felt most keenly in southern England where property values are highest and yields lowest. This is creating scarcity and explains why rents are rising in the face of increased rental demand as levels of employment continue to grow.”
Paul Chapman, director at Countrywide, added: “Tenant demand has been strong with an even busier summer than usual continuing into Q4.
“Stock availability continues to be a challenge with some landlords experiencing an increase in rental price and shorter void periods, both of which go some way towards offsetting the increased costs as the requirement to comply with additional legislation continues.”
Over the last decade average rents have grown from £700pcm to £886pcm, an increase of 27%, said Zoopla. This compares to 26% growth in average earnings.