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Buy-to-let rents standstill across the country, although some rental hotspots outperform the rest. This is our rent digest for the final month of 2020.
A deep look at the latest official rent data from the Office for National Statistics highlights the Midlands and South West, where rents are growing the fastest. Average private rents in England rose by 1.4% in November – an unchanged rate from the previous month. In Wales, rents were up 1.6%, while Scotland lags the rest of the country with a 0.6% increase.
Data from the ONS is a month behind, so the latest batch of statistics refers to November.
The average national rise was 1.4% year-on-year – much higher than the inflation rate of 0.6% recorded by the consumer price index, the government’s measure of the cost of living increases. The rent rise adds an extra £7 to the bill of a tenant paying £500 a month a year ago.
The ONS explains that rent growth has slowed since the start of 2016, mainly influenced by a slowdown in London. “Rental growth has picked up since the end of 2018, driven by strengthening growth in London.
Rental growth has remained broadly flat since November 2019,” says the ONS Index of Private Housing Rental Prices.
For the UK, excluding London, rents rose by 1.5% in the year to the end of November, a slight decrease from 1.6% in October. By comparison, rents in London increased 1.1%, up from 0.9% in October. Since the ONS started to keep rent records in January 2015, buy-to-let rents have grown by 9.8%.
The South West had the most significant year-on-year rent increase – 2.3%, and the East and West Midlands were behind – both returning 2.3% rises. The lowest rent rises were again in London and the South East – where rents were up 1.1% in the capital and 0.9% in the South East.
Read the full ONS rental report for November 2020
Several property businesses and other organisations produce their rent statistics. Here is a digest of some of the data:
The RICS market survey of letting agents for November shows tenant demand and the number of homes to rent are falling.
“Tenant demand was unchanged over the month. At the same time, landlord instructions fell according to a net balance of -19% of contributors. Near term rental growth expectations remain slightly positive, with most parts of the UK anticipated to see an increase. Again, for the third consecutive month, London is a clear exception, where a net balance of -63% of respondents expect rents to fall over the coming three months,” says the report.
For landlords confused by the stats and what they mean, here are some 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 significant sample, so it should return the most reliable figures, but the time taken 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 are based on customer data, which may not fully reflect the market.
That’s a business decision for landlords. The rent statistics indicate how the market is moving but do not reflect demand from tenants and property standards in local neighbourhoods. Don’t forget the data is historical, so it gives a picture of 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 much 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 will likely give a better view of 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.