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The lettings market shrank in 2020 as renters turned to buying a home with space to work remotely rather than opting to live close to work in more expensive urban locations.
New instructions and lets agreed were down 8% last year, while completed lets fell by 11%, added a study by property consultants TwentyCi. The research compared last year’s private rental market with the previous year and suggests that the COVID-19 pandemic and the stamp duty holiday have impacted buy-to-let.
Meanwhile, rent rises have stagnated at around 1.4% for more than a year, according to Office of National Statistics data. (ONS) – just a £7 a month rent increase for a tenant paying £500 a month for a private home.
The stamp duty holiday scrapping the tax on homes in England worth less than £500,000 has boosted the market by making homes more affordable for many, says the report from TwentyCi.
Around 550,000 properties are going through the sales process now, hoping to complete before March 31, when the stamp duty holiday ends. Many buyers are moving out of expensive lets in towns and cities as they are encouraged to work remotely because of the coronavirus pandemic. Drilling down into the data, the report shows:
| 2020 | 2019 | Change | |
| New instructions | 1,440,063 | 1,571,757 | -8.38% |
| Let agreed | 930,852 | 1,013,623 | -8.17% |
| Let | 819,220 | 925,213 | -11.46% |
| Fallen through | 173,360 | 166,241 | 4.28% |
| Rent changed | 624,412 | 574,092 | 8.77% |
| Withdrawn | 716,332 | 728,529 | -1.67% |
Source: TwentyCi
Data from the ONS is a month behind, so this batch of statistics relates to the end of December. The average UK rent rise was 1.4% - where the stat has sat since November 2019. In financial terms, the increase means a tenant paying £500 monthly rent in December 2019 now pays £507.
The rent figures change if figures for London are included or left out of the calculations. In the year to last December, rents for the UK excluding London rose by 1.6% - slightly up from 1.5% a month earlier. London rents were up 0.9% in the same period, down from 1.1% in November. Since the ONS started crunching the data in January 2015, private rents have increased by 9.9%.
The South West continues to see the most significant rent increases across England, with a year-on-year rent increase of 2.6% - up from 2,3% in November. The East Midlands maintained the second spot with a 2.4% rise, with the West Midlands next on 2.2%. The lowest rent rises were again in London and the South East – where rents were up 0.9% in the capital and 1% in the South East.
Read the full ONS rental report for December 2020
The average rent for a new UK private tenancy was £979 a month in December – up 2.7% year-on-year and 0.5% for the month, says tenant referencing agency Homelet.
Excluding London, the average UK rent is £838 a month – a massive 5.7% jump on last year, while rents in the capital are down 4.4%. This is the seventh month in a row London rents have dropped, and average rents in London are £1,556 a month.
| Region | December 2020 | November 2020 | December 2019 | Annual change | Monthly change |
| South West | £924 | £910 | £840 | 10.00% | 1.50% |
| East Of England | £983 | £968 | £913 | 7.70% | 1.50% |
| South East | £1,085 | £1z065 | £1,023 | 6.10% | 1.90% |
| Scotland | £687 | £687 | £654 | 5.00% | 0.00% |
| West Midlands | £735 | £733 | £700 | 5.00% | 0.30% |
| East Midlands | £694 | £689 | £662 | 4.80% | 0.70% |
| Yorkshire & Humberside | £682 | £677 | £655 | 4.10% | 0.70% |
| Wales | £679 | £673 | £653 | 4.00% | 0.90% |
| North West | £772 | £766 | £756 | 2.10% | 0.80% |
| Northern Ireland | £651 | £646 | £666 | -2.30% | 0.80% |
| North East | £539 | £536 | £553 | -2.50% | 0.60% |
| Greater London | £1,556 | £1,576 | £1,630 | -4.50% | -1.30% |
| UK | £979 | £974 | £953 | 2.70% | 0.50% |
| UK excl Greater London | £838 | £828 | £793 | 5.70% | 1.20% |
Source: Homelet
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 extensive 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.