Rental Report Headlines 2016
Every month we are bombarded with a host of rental reports which cover what’s happening in the market, both nationally and regionally and it's our job to analyse what's really going on.
Belvoir Lettings “The average rent for offices across the UK which have traded consistently over the last eight years is £729 per month – a year on year increase of 2%. (Jan 16 - England, Wales & Scotland)”
LSL “Best buy-to-let returns since 2014. (Jan 16 - England & Wales, index started in 2009)”
ARLA “Supply of rental properties at lowest in a year. (Jan 16 - UK)”
Countrywide “Slowest rental growth for three years but average UK rents 12% above pre-recession peak. (Jan 16 - England, Wales & Scotland)”
Kate Faulkner comments on Rental Report Headlines:
“Nationally, the top letting agent rental indices are showing similar levels of growth year on year to the latest data released from the Office of National Statistics Index of Private Housing Rental Prices. These rises of 2-3% are perfectly in line with wages, and it’s good news for landlords as it also means real rises in income for the first time in some years with inflation remaining at zero for most of 2015.
This is pretty good news for tenants renting privately compared to those in social housing. The Independent recently reported that council tenant rents were rising 4x higher than the average wage in the last five years! Imagine the fury if that had happened in the PRS!
And the latest English Housing Survey which monitors trends up to the summer of 2015, recorded social rents rising by 6%, year on year, versus ‘no change’ in the PRS.
Based on this robust evidence, you do wonder where on earth the figures come from which claim private rents have risen by 18% in Brighton according to the Guardian.”
Read our - Renting a Room
What's happening to rents in the UK regions?
Belvoir Lettings Rob Price of Belvoir Cardiff reports “Rents are edging up slowly in Cardiff but we are not experiencing large increases.” Craig McCracken of Belfast comments: “I would estimate that rents have increased by £25 - £50 per month for properties over £500." Steve Slawson from Worcester comments “Rents are rising slightly but the increase is being driven by the tenant demand for a particular property/area. It’s not happening across the board.” Charlotte Baker of the Melton Mowbray office reports “The last six months of the year saw rent prices hold at the levels seen at the start of the year but not increase further.” (Jan 16)
LSL “On a regional basis annual rent rises are now led by the East Midlands and East of England, with rents up 5.9% and 5.8% respectively since January 2015. This pushes London to third place on this measure. At the other end of the spectrum, rents are lower than a year ago in the South East and North East regions, both seeing a 1.0% annual fall. Meanwhile the slowest annual rent rises are in Wales, up just 0.6% since January 2015.
“In total, three of the five regions of Scotland have seen rents rise in the year to January 2016. Over the past twelve months, average monthly rents in Edinburgh & the Lothians have now reached £642 per month. Rents in the South have risen 6.0% (£29) in the year to January. At the other end of the spectrum, in the East of Scotland, there has been a downturn in rents. Rents in Glasgow & Clyde have also fallen year-on-year, recording a 0.2% annual drop in January. (Jan 16)”
Countrywide “In the North West, North East and Wales the average tenant is still paying less than they were in 2007 by £12 a month. Across the UK as a whole, one in five tenants are still paying less rent than they were in 2007. In London, incomes have only increased by 10% since 2007 in the Capital whilst rents have grown by 34% fuelled by a lack of supply and high demand.
“This January, more landlords were able to increase the rent for tenants who renewed their contract in the North East, North West and Wales than at any time since 2012. (Jan 16)”
Read our - Renting Quick Guide
Kate Faulkner comments on Regional Rent Variations:
“So a pretty stable picture for private rents from a national perspective. However, the trend is pretty different regionally, and although rents aren’t rising anywhere near the rate of house prices this shows that opposed to them being ‘extortionate’ as landlords and agents are often accused of, they are actually increasing at a far more affordable level versus buying.
The highest growth was seen in the East Midlands and East Anglia, while Wales saw a bit of a fall and overall rents ‘up north’, from most of the indices aren’t showing much growth at all.”
For more read my comprehensive rental summary
Who are the tenants renting in the PRS and how many are over 55? Groundbreaking research from LSL 2016
What are the three key types of tenant identified by the survey?
The survey identified that tenants usually fall into one of the following three groups and noted some key differences between them, as follows:
1 - Young Independents
This group of tenants are 18-25 year olds either with flexibility a priority and renting a new experience for them. They are significantly (3 times) more likely to be in a flatshare but are confident about owning a property in the relatively near future regardless of the fact that they have little knowledge of the costs and processes. The survey characterises YIs as 'idealistic'.
2 - Moving Up
This group are predominantly middle middle aged married couples with children. They are more pragmatic than YIs and have a greater understanding of the situation facing first time buyers. They are therefore making an extra effort to save for a deposit or renting between house moves.
3 - Reconciled with Renting
This group consists mainly of over 55s without children or with kids that have flown the nest. They are renting as a result of alterations in their life situation or due to low income. Although they are not overly fussed about buying, a priority for them is being allowed to make changes to the property.
What do tenants expect to be included in the monthly rent?
Unsurprisingly the survey found that YIs had higher expectations than the more experienced groups. However, there were two things that more than 50% of tenants expected to come as part of the standard monthly rent:
Read - How to let a property
What are the top thee concerns tenants have with rent?
Good news for landlords and letting agents!
Some positive news for landlords and letting agents has come out of the survey with around two thirds of tenants reporting they are either happy or very happy with renting whilst over 80% agreed that renting suited their lifestyle. Just 5% of those surveyed stated that they were very unhappy with renting, poor communication between landlord and tenant being a major reason given for this.
Read - How to let a property
What are the top 5 things that tenants would pay extra for?
Due to a tighter budget the RwR group are less interested in paying for extras, however the other two groups expressed a willingness to pay for additional amenities, the most popular are as follows:-
What else do tenants want?
For more on what tenants want read the full - LSL Tenant Survey 2016