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Rental growth at slowest pace in three years

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Rental growth at slowest pace in three years

The Countrywide monthly Lettings Index for January has found that compared to the same month last year average rents in the UK rose 1.2% to £906 a month.

While this represents the slowest increase in three years, average rents are 12% above their pre-recession peak, reaching the highest level on record. Unsurprisingly, London has seen the largest growth in rents anywhere in the country since 2007, with rents 34% higher than their pre-recession record. Between 2007 and 2016 the average Londoner has seen their rent rise from £966 to £1,295 a month.

Despite the popular narrative of ever rising rents, over the past nine years the majority of the country has experienced rents growing steadily in line with incomes. Average income has increased by 12%*1 since 2007 according to the ONS compared to a 12% increase in average rents.

However, the rental market adheres to a classic North/South divide. 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 is still paying less rent than they were in 2007. In London rents have grown well beyond incomes. 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. As a result tenants have had to either share, downsize or move further from the centre in order to accommodate this rise.

At current rates of rental growth the three regions where rents remain below their previous peak will see average rents surpass 2007 levels by the middle of 2016. In these regions landlords have increasingly looked to renegotiate with long term tenants, some of whom have enjoyed years without any increase in their rent. 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.


In 2007 the average monthly rent for a home in the UK peaked at £809 before the recession hit. Between the end of 2007 and 2008 the average cost of renting a newly let home fell 11%, equating to a fall in the average monthly rent of £87. This brought the cost of renting the average home down to £720. It wasn’t until the start of 2010 that rents started rising again.

Johnny Morris, Research Director at Countrywide said: “Nationally rents in January rose at the slowest rate since 2012, as some of the upward pressure on prices subsided and affordability limited further rises. Across most of London and the South East the slowdown in rental growth is the first since 2010, where rents have been growing for the past 6 years.

The most sustainable way of creating a more affordable rental market in London and the South is by building more homes of every tenure. Unlike in the US where institutional investors build homes to rent, in the UK the sector is dominated by small landlords meaning the link between new homes getting built and the rental market isn’t nearly as close as it should be.”

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Latest Comments

HMO Midlands Landlady
HMO Midlands Landlady 24 May 2016

Tenants disappearing into the night is common from shared houses ( licensed and un-licensed HMO's) often when they owe considerable rent- they remove all their possessions, leave key in room and tell other...

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CommercialTrust
CommercialTrust 20 May 2016

With the bulk of the market controlled by large developers, profit rather than necessity determine the pace at which homes are built. There are hundreds of thousands of plots that have planning permission...

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Johna
Johna 20 May 2016

"Easier said than done" is what I would say. Of course, it would be more than great to have more in quality and affordability, but I do not trust talk anymore.. What is said is not what is happening.

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Johna
Johna 20 May 2016

in my humble opinion being fair like THE most important! I myself have had bad experience with unfair landlords... not to mention that I know how to do a proper end of tenancy cleaning since I am a fantastic...

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richardrawlings
richardrawlings 18 May 2016

NB - even if we doubled our commission levels in the UK, we'd still be by far the cheapest agents in the entire world.

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Agent_PeeBee
Agent_PeeBee 18 May 2016

Clueless. Someone needs to take these people's computers away from them so they can do no more harm than they already have.

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richardrawlings
richardrawlings 18 May 2016

Nonsense! The cost of selling a house nowadays has little bearing on the fees charged. Don't believe your own spin on this. Fees have spiralled down to pathetic levels in areas where weak agents have allowed...

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Simon Oliver
Simon Oliver 16 May 2016

The best solution is to buy a property that has built-in income generating potential: a nice house with a couple of gites in the grounds is a good start. In France, the rune of thumb is that one 2-bedroomed...

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WPD
WPD 12 May 2016

I suggest the answer is to have the notary system being one legal person who represents both parties. Having experienced it a couple of times in France it was a dream compared to our dysfunctional system....

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warren
warren 03 May 2016

It's enough to make me weep into my Pimm's :(

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james anderson
james anderson 03 May 2016

The sad demise of the croquet lawn...

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CommercialTrust
CommercialTrust 11 Apr 2016

".. the stricter lending criteria will reduce the amount of buy-to-let lending by 10% to 20% in three years’ time." The PRA was actually referring to cumulative approvals here. What they believe is that...

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