Guild of Landlords Rent Digest – June 2021

Yearly rent rises have plateaued for the past 18 months of COVID-19 restrictions. This is our rent digest for June 2021. 

Property market experts at the Office for National Statistics say the private rented market is ‘broadly flat’ due to a buy-to-let slowdown in London. 

Although letting agents argue they have seen a considerable increase in the number of tenants looking to rent a new home and a drop in homes available for them to move into, annual rent increases have hovered around the 1.4% mark since at least January 2020. Statistics also show rents hitting a record high month after month, but the increase amounts to tenants paying just £6 a month more in a year. 

What appears to be happening is property professionals who earn a living from renting homes are trying to stoke a stagnant market. Rents rose by 1.2% across the UK on May 31, according to the data from the Office for National Statistics (ONS). 

A broader picture of how rents have changed over the past 18 months comes from this table:

ONS rent change data: January 2020 – May 2021

The data shows rent rises remained flat until the start of 2021, and since then, the trend has been a shallow decline in rent increases.

“Growth in private rental prices paid by tenants in the UK remained broadly flat between November 2019 and the end of 2020. The beginning of 2021 has seen a slowdown in rental price growth, which has been driven by prices in London,” said the ONS report. 

“In the 12 months to May 2021, rental prices for the UK excluding London increased by 1.7%, unchanged since March 2021. London private rental prices decreased by 0.1% in the 12 months to May 2021, down from an increase of 0.1% in April 2021.”

Trade body the Association of Residential Letting Agents (ARLA) says letting agents have a record number of tenants looking for rented homes. In contrast, the number of homes available for rent has also increased during the past month. 

The Royal Institution of Chartered Surveyors (RICS) echoes ARLA by confirming tenant demand remains strong but admits the number of homes to rent has fallen for the tenth month.

Rent growth in Scotland has leapt ahead of England for the first time since August 2016. The figures for the year to the end of May 2021 are:

• England including London: Rents up 1.1% - down 0.1% from April
• England excluding London: Rents up 1.8% - a 0.1% increase from April 2021
• Wales: Rents rose 1.5%, down 0.1% from April
• Scotland: Rents up 1.3% year on year, up from 1.1% in April

Rents by region in England

Rents are growing quickest in the East Midlands, where landlords have seen a 2.4% year-on-year rise – a slight rise of 0.1% from April. Rents are moving the slowest in London, where rents dropped 0.1%, followed by the South East, where the increase was 1.1%, says the May ONS Private Housing Rental Price Index.

Rents hit high for six months in a row

Asking rents are soaring to new heights despite the coronavirus pandemic, according to data from tenant reference agency Homelet. The average UK rent is £997 – hitting a new peak for the sixth month. While rents across most of the country are rising, London rents have dropped 0.9% since May 2020 – the 12^th fall in as many months.

“We’ve seen from sharp house price spikes across the country that the Coronavirus pandemic changed what people are looking for in a property.,” said HomeLet CEO Andy Halstead. 

“Many are looking to buy properties offering more living space, particularly those working from home. This is also true of the private rented sector. “Rental properties continue to play a crucial role in meeting the demands of people up and down the country, and the flexibility and responsiveness shown by the private rental sector will be vital in the coming months as the country opens up again.”

Homelet – Average rents by region

Source: HomeLet

Guild of Landlords Rent Digest – FAQ

For landlords confused by the stats and what they mean, here are some answers to the most asked questions about rents.

Why do the rent indices show different results?

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 solid data. Homelet statistics are based on customer data, which may not fully reflect the market.

Should landlords raise rents in line with the stats?

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.

Which rent index is the best?

That’s up to individual landlords. For instance, one index with a strong 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.

How has coronavirus disrupted the statistics?

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.