Rents for new lets up by 3.1% in 2015

Newly released analysis from Countrywide plc suggested that rents for freshly let homes continued to grow in 2015.

Despite growing at a slower pace than in 2014, rents climbed by an average of 3.1% over the course of the year, sending monthly typical monthly rental costs to £919 per calendar month.

Increases

The research shows that rents increased in all regions of England, with the East seeing the highest increase of 6.5%. Central London recorded growth of just 0.5%, which was the lowest of all regions.

Rental growth in 2015 was boosted by high demand for accommodation, with a low stock of homes available. This imbalance had led to increased competition for homes in the market, with the average property let within 20 days of being instructed, two days quicker than in 2014.

A slowdown in rental growth during 2015 for Greater London properties still saw rents increase by 4.7%. With rents spiralling in recent years, tenants have more often looked to less expensive areas of Outer London. This led the proportion of under 25s taking up residence in the rental sector in London to fall by 4% in 2015. What’s more, southern regions near London have seen increases in the proportion of under 25s entering their market, with Londoners looking further out for affordable agreements.

The table below shows that average rent for newly let units in 2015:

Region	Average rent in Q4 2015	Average rent in Q4 2014	Year-on-year increase in rent
Greater London	£1,292	£1,234	4.7%
Central London	£2,497	£2,485	0.5%
East of England	£945	£887	6.5%
South East	£1,139	£1,118	1.9%
South West	£816	£784	4.1%
Midlands	£663	£651	1.8%
North	£636	£627	1.4%
Scotland	£662	£637	3.9%
Wales	£666	£648	2.8%
Total	£919	£891	3.1%

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Rents for new lets up by 3.1% in 2015

Affordability concerns

Johnny Morris, Research Director at Countrywide, noted, ‘a mix of steadily increasing demand and a lack of homes to rent supported rental growth in 2015, even though wage growth remained subdued. In the capital, rising costs meant renters were more likely to move to Outer London or the commuter belt in search of more affordable places to live.’[1]

‘2016 looks to be a complicated year for landlords as the government focuses its efforts on boosting homeownership,’ Morris continued. ‘The additional 3% stamp duty charge, stricter regulation and changes to tax relief from 2017 onwards will all take their toll on investor sentiment and impact behavior. With stock at a premium, the smaller landlords who decide to sell up will add upward pressure to rents, although any rises will be tempered by affordability pressures.’[1]

The table below indicates the average rent for occupied units in 2015:

Region	Average rent December 2015	Average rent November 2014	Average rent December 2014	Year-on-Year Increase in rent	Month-on-Month Increase in rent
Greater London	£1,196	£1,192	£1,132	5.7%	0.3%
Central London	£2,449	£2,445	£2,435	0.6%	0.2%
East of England	£862	£859	£829	4.0%	0.3%
South East	£997	£995	£981	1.6%	0.2%
South West	£737	£736	£724	1.8%	0.1%
Midlands	£629	£629	£620	1.5%	0.0%
North	£624	£623	£612	2.0%	0.2%
Scotland	£641	£639	£624	2.7%	0.3%
Wales	£650	£649	£636	2.2%	0.2%
Total	£857	£856	£834	2.8%	0.1%