Swelling demand drives up rents in the East

The latest Landbay Rental Index has revealed that, in the 12 months to July, residential rents in the East of England grew by 2.35% - almost four times the UK average of 0.64%.

Related topics:  Landlords
Warren Lewis
4th August 2017
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According to the data, strong demand for low-rent accommodation by long-distance commuters is thought to be a contributing factor, pushing rents up by more than 2% in eight out of the ten counties in East England, and more than 3% in four of the ten.
 
Of the capital’s five hottest commuter belt hotspots outside the M25, four are found in the East of England. Luton (4.23%), Peterborough (3.75%), Thurrock (3.56%) and Bedfordshire (3.19%) all have average rents less than half of the London average of £1,873, but have all seen rents rise significantly in the past year, while in London they have fallen by -1.05%. The current pace of growth means a tenant in Luton is now paying £789 each month in rent, compared to £757 a year ago, an extra £384 over the year.
 
The findings highlight the growing affordability crisis facing young people working in the capital, suggesting that many are moving further afield to reduce their rent burden, possibly while they save for a house of their own. TFL recently revealed that Southern Rail trains are now the most overcrowded in the country, with some services carrying more than twice the passengers they were designed for1, while figures this week suggested that more young people than ever, especially in London, are frustrated by the struggle to save, and now feel they will never find their way onto the property ladder.
 
Less affordable areas in London’s commuter belt, those with higher average rents and particularly those in the South East, have seen less demand and therefore slower rental growth.
 
While the East of England has seen competition push up rents across the board, just 3 out of 19 counties in the South East have seen rental growth above 2%. It’s telling that those that have, Medway (3.16%), Kent (2.28%) and West Sussex (2.03%) all have more affordable average rents, less than half the London average. Indeed the two counties in the South East with the highest rents, Surrey (£1,439), and Windsor and Maidenhead (£1,270) have both seen rents fall, by -0.13% and -0.23% respectively.

Elsewhere, already expensive areas surrounding the capital have seen far less rental growth. For someone in Windsor or Maidenhead, traditionally deemed as ‘desirable’ regions for commuters, rents have seen the biggest slowdown.
 
Annual UK rental growth slowed to 0.64% in July 2017, less than half of the rate of 1.83% seen at the end of July 2016. Outside of London, the pace slowed to 1.56%, with average rents reaching £756. Within the capital, especially central London, the rents have now been falling for over a year, by -1.05% over the past 12 months.
 
John Goodall, CEO and founder of Landbay said: “With rising inflation and rock-bottom interest rates it is little surprise to see demand in the more affordable Home Counties rising faster than pricier parts of London and the South East. Naturally these surrounding areas are starting to experience a surge in rental prices, creating a ripple effect out from the capital. There are of course a number of factors at play, but as yields tighten in the capital landlords may well be branching out to the East of England in a bid to meet this demand.”

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