The latest index to be published assessing the rental market in 2015 shows that rents increased by almost 4% over the course of the year.
According to the Landbay Rental Index , the average UK rents rose by 3.8% in 2015, despite a seasonal fall of 0.2% in December.
In addition, the Index suggests that a lack of housing across the country has led to rental increases outpacing wages in large parts. Three bedroom properties have seen the greatest rise.
Regional rises
Each region of the UK saw rents up year on year, with the average rent now standing at £1,280 per month. London recorded the highest average rent, of £2,047 per month, with the South East recording £1,019 and the East of England at £863.
Northern Ireland recorded the largest yearly increase in rents per region, with 6.7%. This was followed by the East of England (5.6%), Scotland (4.5%), West Midlands (4.4%), the South West (4.1%) and London (4%).
The South East saw annual growth of 3.7%, with the East Midlands and Wales showing increases of 3%. Yorkshire and the Humber recorded yearly increases of 2.1%, the North East 1.8% and the North West just 0.9%.
In comparison to 2014, three bedroom homes have seen the greatest increase in the average rental price. Rents were up by 5.2% to £1,484, indicating that family homes and people sharing properties were in high demand.
For a one-bed home, rents climbed by 3.2% to £1,042 and for a two bedroom by 3.9% to £1,243.
Hotspots
Among the country’s top risers in rental prices were commuter hotspots around London. Luton saw a rise of 11.1%, Medway 8.8% and Thurrock 7.3%, indicating that many workers in the capital are priced out of living there.
‘Despite a small seasonal dip towards the end of the year, rents rose significantly ahead of wages in 2015,’ noted John Goodall, chief executive officer of Landbay. ‘Rents often track wages as consumers with more pay compete for the most desirable rental properties, but the fact that rents are outpacing wages is a clear sign of the shortage in properties to rent as large parts of the UK face an acute housing shortage. This trend is clear in London and the South East, along with large parts of the East Midlands and East Anglia and it is most evident for three bedroom properties, ‘ he continued.[1]
Landbay Rental Index shows 4% rise in 2015
Weeding out
‘Based on its recent policy changes for the private rental sector such as the new stamp duty surcharge and changes to tax relief on mortgage interest, the Government seems intent on weeding out amateurs from the ranks of new buy-to-let investors. If it is successful, our rental index suggests that the result is likely to be higher rental income for the professional investors who are not impacted by the changes,’ Mr Goodall added.[1]
Concluding, Goodall said, ‘as a peer to peer lender to the residential property sector, we enable any investor to benefit from a solid, dependable rate of return that is underpinned by UK bricks and mortar and the growing rental income it generates by lending to professional property investors.’[1]
[1] http://www.propertywire.com/news/europe/uk-average-rents-index-2016011511440.html