This puts average rents at £790 per month, as of January 2016.
An accelerating annual pace of rent rises comes despite recent seasonal month-on-month drops in the latest market rents, dipping by 0.4% between December and January.
While rents have fallen on a monthly basis over the winter period, this trend is beginning to reverse into January, with the 0.4% latest month-on-month drop comparing to a 0.6% fall in December, 0.9% in November and a 1.2% monthly drop into October 2015.
Adrian Gill, director of estate agents Reeds Rains and Your Move, comments: Right now, canny tenants are taking advantage of the slightly cooler winter rental market, and securing tenancies with rents a little lower than in the peak autumn market last year. There are good deals to be had. But underneath this seasonality, rents are beginning to accelerate once again on an annual basis.
There is a huge shortage of housing in the UK, particularly compared to an accelerating population and an economy that continues to outpace neighbouring countries. Meanwhile, real wages continue to rise meaning many tenants are able to pay a little more rent if necessary. In a competitive market that is a recipe for rent rises.”
Rent rises in East Midlands and East of England overtake London
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, with rents in the capital 5.7% higher on an annual basis, marginally slower than 6.3% in the capital in December.
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.
Six out of ten regions have witnessed monthly falls in rents, in line with the overall month-on-month trend across England & Wales. This is led by London, with rents in the capital 0.7% lower than in December.
Tenants mend household finances in the New Year
Tenants in the private rented sector have paid down outstanding rent in January. On average late rent now stands at 8.2% of all rent due, representing an improvement on December’s figure of 9.3%.
However, tenant finances remain slightly more difficult to manage than a year ago, with the latest arrears rate of 8.2% comparing with 6.8% in January 2015.
On a longer-term basis late rent remains reasonably steady compared to the all-time high of 14.6% of rent in arrears seen in February 2010.
Adrian Gill concludes: “Some tenants seem to be applying New Year’s resolutions to keep up with the bills. But the best news is that they are able to do so and the money is there.
December is the most difficult month for most tenants, a fact which always shows up in all our statistics on late rent. That was no different at the end of last year. But regardless, renters have proven resilient and it’s encouraging to start off 2016 with tenants’ finances going the right way.”
