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Rents are stagnating for buy-to-let landlords, according to the latest official data. Rent Digest – August 2021.
Although rents have risen at 1.2 per cent a month since April, the trend is a slow decline, says the Office for National Statistics (ONS). For July, the latest data shows UK rents continued to rise at 1.2 per cent a year.
However, rents in London dropped by 0.1 per cent – the only UK region in negative growth. The ONS blames a decrease in demand from tenants in the capital mainly on the COVID-19 pandemic.
"Remote working has shifted housing preferences, meaning workers no longer need to be close to their offices, and an increase in supply, as short-term lets change to long-term lets are decreasing demand from renters," said a spokesman.
Since records started in January 2015, UK rents have risen 10.7 per cent. Professional trade bodies, the Association of Residential Letting Agents (ARLA) and the Royal Institution of Chartered Surveyors (RICS), both report more people are seeking to rent homes, but the number available is falling.
| ONS | ||
| A | M | |
| Jan-20 | 1.5 | 0.1 |
| Feb-20 | 1.4 | -0.1 |
| Mar-20 | 1.4 | 0.0 |
| Apr-20 | 1.5 | 0.1 |
| May-20 | 1.5 | 0.0 |
| Jun-20 | 1.5 | 0.0 |
| Jul-20 | 1.4 | -0.1 |
| Aug-20 | 1.5 | 0.1 |
| Sep-20 | 1.5 | 0.0 |
| Oct-20 | 1.4 | -0.1 |
| Nov-20 | 1.4 | 0.0 |
| Dec-20 | 1.4 | 0.0 |
| Jan-21 | 1.3 | -0.1 |
| Feb-21 | 1.4 | 0.1 |
| Mar-21 | 1.3 | -0.1 |
| Apr-21 | 1.2 | -0.1 |
| May-21 | 1.2 | 0.0 |
| Jun-21 | 1.2 | 0.0 |
| Jul-21 | 1.2 | 0.0 |
Key: A = Annual M = Monthly
Rents are growing the fastest in Northern Ireland – which has seen them rise by 3.4 per cent in a year. The figures by country for the year ending July 2021 are:
The region's most significant year-on-year rent rise was 2.4 per cent, shared by the East and West Midlands. Rents are rising the slowest in London, which moved down 0.1 per cent.
Rents have improved the most in the South West and East Midlands during the past year. Both have posted 2.5 per cent annual increases. London is down 0.1 per cent. The next worst increase was in the North East, where rents rose by 1.4 per cent over the past 12 months, followed by the South East, where rents were up 1.5 per cent in the year.
As the coronavirus pandemic loses grip on the economy and people return to work, rents are expected to rise even higher. Tenant reference agency Homelet CEO Andy Halstead says average rents already stand at a record high of £1,029 a month – 6.6 per cent up in a year and 2.2 per cent up in a month.
Unlike trade bodies ARLA and RICS, he explained he believed the market in London is set to improve.
"The data shows the exceptional growth in rental values, particularly in areas that are within commutable distance to London. Throughout the pandemic, the rate of growth in some regions has more than doubled against previous years," said Halstead.
"We see positive signs in the capital, rents are now just 1.2% down on pre-pandemic levels from July 2019, with boroughs in central and inner London showing growth in achieved rental values. With restrictions easing, optimism is returning. The demand will steadily grow for the rest of the year."
| Region | Jun 2021 | May 2021 | Jun 2020 | Monthly change | Annual change |
| South West | £948 | £943 | £858 | 0.5% | 10.5% |
| Wales | £702 | £698 | £636 | 0.6% | 10.4% |
| East of England | £1,005 | £1,001 | £917 | 0.4% | 9.6% |
| South East | £1,105 | £1,095 | £1,022 | 0.9% | 8.1% |
| East Midlands | £704 | £704 | £651 | 0.0% | 8.1% |
| Scotland | £738 | £707 | £692 | 4.4% | 6.6% |
| Yorkshire & Humberside | £701 | £697 | £658 | 0.6% | 6.5% |
| Northern Ireland | £699 | £678 | £659 | 3.1% | 6.1% |
| West Midlands | £754 | £755 | £714 | -0.1% | 5.6% |
| North West | £799 | £790 | £758 | 1.1% | 5.4% |
| North East | £547 | £560 | £525 | -2.3% | 4.2% |
| London | £1,607 | £158 | £1,583 | 1.5% | 1.5% |
| UK | £1,007 | £997 | £951 | 1.0% | 5.9% |
| UK excluding London | £861 | £854 | £797 | 0.8% | 8.0% |
Source: Homelet
For landlords confused by the stats and what they mean, here are answers to the most asked questions about rents.
Check the data carefully. Different indices cover different periods, and the samples vary between reports. The ONS has the most extensive sample, so the most reliable figures should return, but the time to collect and analyse the statistics often means the ONS data lags behind the rest of the sector. ARLA derives insights from letting agents and provides what's known in the trade as a sentiment survey rather than factual data. Homelet statistics come from customer data, which may not fully reflect the market.
That's a business decision for landlords. The rent statistics indicate how the market moves but do not reflect demand from tenants and property standards in local neighbourhoods. Don't forget that the data is historical, showing what's happened rather than what will happen.
That's up to individual landlords. For instance, one index with a solid customer base in the same area as a landlord's portfolio may align more closely with market rents for that neighbourhood. Average data is not good if you don't have an average home, and median rents will cover everything from a room in a shared house to a four-bedroom home. Extra research with local letting agents is likely to indicate better where a landlord should pitch a competitive rent and stop them from underselling.
Although several letting agents and property organisations publish regular rent statistics, many have been affected by the coronavirus lockdown that has their reports suspended or delayed.