Rightmove Reports: Asking Rents Reach Unprecedented Heights
Posted on Sunday, 23 July, 2023
The latest data from Rightmove reveals that average asking rents for new tenants outside of London have reached an all-time high at £1,231 per calendar month. This figure represents a remarkable 33% increase compared to pre-pandemic levels in 2019, with an increment of over £300 from £923 pcm.
By contrast, the period between 2015 and 2019 saw average asking rents for new tenants outside of London rise by a mere £71 (8%), underscoring the rapid surge in asking rents since the pandemic hit. This surge can be attributed to heightened tenant demand and a dwindling supply of available rental properties.
Although the yearly growth rate of rents for new tenants has slightly eased, it still hovers near double-digit levels. The situation in London is similar, with average asking rents reaching a record high of £2,567. Although the pace of rent growth has slowed somewhat, it continues to remain in double-digits for the seventh consecutive quarter. London rents are now 28% higher, with an increase of £559 pcm, compared to the same period in 2019.
Despite the rapid increase in prices, rental properties are being snapped up quickly, and landlords are witnessing long queues of prospective tenants eager to view and rent their properties. The current average time to find a tenant for a rental property is 17 days, the fastest since November 2022.
Tenant demand remains exceptionally high, surpassing even the frenzied levels of the previous year. Currently, it is 3% higher than at this time in 2022 and a significant 42% higher than in June 2019. While the gap between supply and demand has slightly narrowed compared to last year, with available rental properties up by 7% from June 2022, the figure remains 42% below the levels seen in 2019.
Landlords are facing challenges from multiple directions, with government sentiment towards the industry, rising taxation, and increasing compliance requirements topping the list of their concerns. Additionally, 25% of landlords express worries about the rising costs of buy-to-let mortgages.
As a result of these challenges, some landlords are deciding to sell their properties. Currently, 16% of properties listed for sale were previously available for rent, an increase from 13% in January 2019. The data indicates that landlords are particularly worried about properties with lower Energy Performance Certificate (EPC) ratings, especially in light of proposed changes to EPC requirements by the government. 33% of landlords with lower EPC-rated properties plan to sell them rather than improve their EPC ratings, compared to 20% who had similar plans last year.
Despite these challenges, landlords recognize the value of having good, long-term tenants in their properties. A significant 57% of landlords stated that tenants, on average, choose to stay in their rental properties for longer than 24 months, with only 8% staying for a year or less.
According to Tim Bannister, from Rightmove, the rental market still faces a disparity between the high demand from tenants and the limited supply of available properties. While the number of available rental properties has improved compared to the record low levels of the previous year, it still has a long way to go to catch up with pre-pandemic levels of stock.
Allison Thompson, National Lettings Managing Director of Leaders Romans Group, notes that low supply and high demand continue to dominate the lettings market, with more people looking to rent rather than landlords selling their properties en masse. While some landlords are considering selling due to potential interest rate rises, Thompson advises against knee-jerk reactions, particularly for those with mortgage-free properties.
Lynne Lancaster, Head of Estate Agency at Penrith Farmers and Kidd’s, highlights the robustness of the rental market in Cumbria, with consistent demand and an increasing number of enquiries and viewings. Tenants are also opting to stay in their rental properties for longer, rather than moving after the agreed term.