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London's landlords are abandoning short-term holiday lets in favour of a return to buy to let. But the transition has triggered a glut of homes in the capital, pushing rents down as fewer tenants have more properties to choose from.
Buy-to-let rents across the UK, excluding London, grew 2.7 per cent in December 2021. In London, the December figure was a fall of -0.1 per cent - the lowest of anywhere in the country. However, confusingly landlords in the capital can still celebrate despite the end-of-year fall; overall rents were up 12.6 per cent in the year - the highest growth in the country.
Including London, the average UK rent increased 1.8 per cent last year, according to the latest data from the Office for National Statistics (ONS).
“Lower rents in London reflects a decrease in demand, such as remote working shifting housing preferences, meaning workers no longer need to be close to offices. It also reflects an increase in supply, as an excess supply of rental properties as short-term lets change to long-term lets,” said the ONS report.
Rents are growing fastest in the East Midlands, where landlords enjoyed a rise of 3.3 per cent in December.
The East of England (3.2 per cent), South West (3.1 per cent) and North West (3.0 per cent) all posted rent rises of more than 3 per cent.
The UK average rent is now £1,060 a month, according to data from tenant referencing agency Homelet. Average rents excluding London ended 6.6 per cent higher at £893 a month.
Echoing the ONS data, Homelet says London rents dropped by -0.3 per cent in December to £1,752 a month. Outside London, the highest rent growth was in the North West (9.3 per cent), while the worst was 3.5 per cent in the South East.
“We expect to see more people move home in 2022, with some choosing to wait until the ongoing effects of the pandemic have reduced before moving to a new rental property. In 2022 we’d expect to see rental values grow in line with wages and inflation, but increased demand and pressures on housing stock could see us reach record growth in 2022,” said Homelet CEO Andy Halstead.
The table shows average rents throughout the UK for December 2021:
| Region | Dec-21 | Dec-20 | Yearly change | Nov-21 | Monthly change |
| London | £1,752 | 1,556 | 12.6% | £1,757 | -0.3% |
| North West | £844 | £772 | 9.3% | £835 | 1.1% |
| Wales | £736 | £679 | 8.4% | £742 | -0.8% |
| Yorkshire & Humberside | £737 | £682 | 8.1% | £736 | 0.1% |
| North East | £580 | £539 | 7.6% | £575 | 0.9% |
| Scotland | £738 | £687 | 7.4% | £740 | -0.3% |
| West Midlands | £786 | £735 | 6.9% | £785 | 0.1% |
| East Midlands | £742 | £694 | 6.9% | £729 | 1.8% |
| South West | £983 | £924 | 6.4% | £964 | 2.0% |
| East of England | £1,031 | £983 | 4.9% | £1,030 | 0.1% |
| South East | £1,123 | £1,085 | 3.5% | £1,129 | -0.5% |
| UK | £1,060 | £979 | 8.3% | £1,058 | 0.2% |
| UK excluding London | £893 | £889 | 6.6% | £889 | 0.4% |
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.