Rents in the residential property sector are continuing to rise across many parts of the UK with no fewer than 20 areas seeing growth of more than 3% in the last 12 months, according to fresh figures.
Luton is the area with the fastest growing rents with a rise of 6.5%, followed by Northamptonshire up 5.1%, Peterborough up 4.8% and Edinburgh up 4.6%, the Landbay rental index shows.
Other areas to see high rental price increase include Medway up 4.5%, Bedfordshire up 4.6%, Thurrock up 4.4%, Bristol up 3.62%, Swindon up 3.31%, Nottingham up 3.25%, Leicester up 3.1%, and Greater Manchester up 3.06%.
Overall rents in the UK remained virtually unchanged at an average of £1,189pcm in January compared with the previous month, but were just over 1% higher when compared with the corresponding month last year. But in London while the average rent is £1,883pcm, this is down 0.42% year-on-year.
Of the 20 locations identified in Landbay’s index report as posting annual rental growth of more than 3% year-on-year, the analysis found that tenants in nine of the 20 areas are currently spending over 60% of their take home pay on rent.
Tenants in Luton, for example, currently spend an average of 68% of their disposable income on rent, with tenants in Brighton and Hove, Bristol and Thurrock spending an average of 69%, 64% and 63% respectively.
John Goodall, CEO and founder of Landbay said: “There are currently 4.3 million tenants in the private rented sector but affordability is becoming an issue across many parts of the UK. Whether tenants are renting as a stepping stone on the way to home ownership or, increasingly, renting for life, people rely on a well-served buy-to-let market to ensure rental growth doesn’t become unbearable.”
Goodall believes that the government’s focus on supplying more rental properties, as illustrated by last week’s housing white paper, suggests that the private rented sector may “finally be given the investment it needs to keep rents in check”.
He added: “Further institutional investment in large scale developments, specifically designed to rent rather than buy, should go some way to professionalise the sector, improving living standards and helping control further rental growth.
“While PRS schemes are already on the way in many of the areas facing the fastest pace of rental growth, the government’s white paper missed an opportunity to highlight where in the country this type of investment is needed the most. For those in the top 20, experiencing rental growth above 3% a year, the clock is ticking.”
|Area||YoY growth||Av. Rent Jan '17||Av. Rent Jan '16||Extra rent paid||Avg disposable income||Annual rent 2017||% of household disposable income|
|Bath and North East Somerset||3.67%||947.72||914.18||402.52||£19,093||11,373||60%|
|Brighton and Hove||3.09%||1,074.17||1,041.94||386.78||£18,685||12,890||69%|
UK Rental Index
|JAN 16||YoY %||MoM %||Av. £|
|UK without London||1.92%||0.12%||750|
UK Rental Index by number of beds
|One bed||Two bed||Three bed|
|YoY %|| MoM|
|Av. £|| YoY|
|Av. £|| YoY|
|UK without London||1.96%||0.11%||592||1.81%||0.10%||707||1.83%||0.11%||815|