The East Midlands has stormed ahead with the highest rent price growth over the past year, according to the October Rental Index Report from Landbay.
Tenants living in properties in London now spend an average of £1,874 on rent per month, while those outside of the capital pay £759 on average.
In London, the average rent for a one-bedroom property is now £1,449 per month, while two-beds and three-beds cost £1,920 and £2,677 on average respectively.
In contrast, tenants in the rest of the UK pay an average of £599 for a one-bed, £715 for a two-bed and £826 for a three-bed property.
Since October last year, the average rent in the UK has risen by 0.68%, to £1,196 a month. In England, rents increased by 0.60% to £1,227, while London actually experienced a drop in average prices, of 0.80%, to £1,874. In Northern Ireland, rents rose by 0.81% over the year to an average of £563 per month, whereas Scotland saw average annual growth of 1.81%, to reach £733. Wales also recorded a healthy increase of 1.49%, to take the average rent to £642 per month.
East Midlands storms ahead
It’s the East Midlands, however, that has taken the market by storm to become the region with the greatest rent price growth in the whole of the UK since October 2016. Out of the top 20 areas for annual growth, the East Midlands scored six places, with Leicester (3.23%) and Northamptonshire (3.19%) making the top ten, in eighth and ninth spots.
Following them, Rutland (2.73%), Leicestershire (2.68%), Nottingham (2.56%) and the East Midlands as a whole (2.42%) snatched spots in close succession, suggesting that the region is becoming a more popular rental hotspot.
In fact, average annual growth in the East Midlands has not only increased by 0.08% since last month, but is currently almost 0.5% higher than the average in the rest of England (outside London), rivalling the surge in rent price growth seen recently in the East of England.
The change comes as the Bank of England (BoE) announced a 0.25% increase in the base rate to 0.5% on Thursday 2nd November – the first rise in over a decade. Since August 2016, when the Monetary Policy Committee (MPC) made the decision to cut the base rate from 0.5% to 0.25%, rent prices rose by less than 1%, while house prices grew by five times as much.
Now, however, this reversion back to 0.5% is expected to affect the rental market across the UK, as mortgage rates are also likely to increase.
The CEO and Co-Founder of Landbay, John Goodall, comments: “A 0.25% uplift might seem small, but the message it would give to the markets, of monetary policy normalisation, could spook landlords, especially those embarking on long-term tenancies. In and of itself, a quarter of a percent is not going to have a huge impact on rental prices overnight, but, symbolically, it has the power to galvanise landlords to price in many of the tax and regulatory changes that have been building up for some time now.”
East Midlands Storms Ahead with Highest Rent Price Growth
The appeal of Leicester
Buy-to-let properties in Leicester, East Midlands have experienced a significant rise in rent price growth over the past month. So much so that the area leads the region as a hotspot for landlords looking to invest.
Although the city takes eighth spot in this month’s index of the top ten areas with the greatest annual rent price changes, it zoomed past the East of England, which has dominated the spotlight in recent months, to take crowning glory on a monthly basis, with growth of 0.60%.
Rental properties in Leicester cost tenants an average of £639 per month, with one-beds costing £491, two-beds being £630 and three-beds at £715. In comparison to the rest of the region, rents are just £17 per month more than the average, and are almost £90 a month cheaper than prices in Northamptonshire – the most expensive area of the region.
With HS2 looking to complete in 2026, it is possible that tenants are looking to get ahead of the rush to take advantage of the more convenient access and travel connections between London, the West Midlands and East Midlands.
However, the regeneration that is currently taking place in the city is perhaps enough of a draw on its own to welcome new tenants. Over the past five years, the city has secured £25m of funding to kick-start development in the Waterside area. This will see the building of 300 new homes, new office space, shops, green areas and canal paths.
Furthermore, another, larger 130-hectare site, Ashton Green, is looking forward to the development of up to 3,000 new homes, ten hectares of office space, a commercial village centre and 50 hectares of green space, which would be perfect for families looking for the best of country and city life.
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