HomeLet Rental Index recently released its average UK rent figures for July 2021. The Index derives its data from over 1 million references processed annually on behalf of the UK’s letting agents. For this reason, it is considered the largest, most up-to-date and insightful view of the UK’s private rental sector. The July figures indicate the average UK rent price has remained above £1,000 for two consecutive months. Let’s take a look.
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What is the average UK rent?
According to the HomeLet Rental Index, the average UK rent is at a record high of £1,029, which, compared to the same time last year, is a 6.6% increase. Additionally, compared to the previous month, this is a 2.2% increase.
HomeLet also points out that with the exclusion of London, the average UK rent is £878, up 8.7% the same time last year.
Has UK rent increased in 2021?
The figures above clearly indicate that UK rent has increased in 2021. In fact, despite London seeing a year of decline, rent has increased in the last two months to an average of £1,645 per month, which is a 2.1% annual variance increase. This could be because of the availability of a vaccine, easing of restrictions and employees being allowed back into workplaces.
Similarly, the current average rent in the South West of England is £989, a 4.3% increase from the previous month and a 12.9% increase from the same time last year. Additionally, looking at figures from the North East, rent is currently averaging £553, a 1.1% increase from the previous month and an annual increase of 3.4%.
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What will happen to UK rent in 2021?
In the wake of the coronavirus pandemic, many tenants have changed their property priorities and location preferences. We have seen people move outside of London for cheaper and more spacious rentals.
However, there’s been a sharp decline in the number of rental homes coming into the market, meaning supply isn’t meeting demand. This has led to a continuous increase in UK rent, especially outside of London.
Will we continue to see an increase in UK rent for the rest of the year? A report from Hamptons indicates that the stamp duty holiday and low-interest rates enticed first-time landlords, and many have entered the buy-to-let sector. We might likely see more rental properties coming into the rental market when the sales complete. If this happens, we could see a correction of the imbalance between demand and supply, and UK rent might gradually decrease.
However, some investors are still cautious, preferring to wait until the market settles. They are claiming that the impact of the pandemic has brought about many uncertainties. For example:
- Will people continue to work from home?
- Which localities now have the best rental yields?
- Will tenants be able to pay rent after the furlough scheme is phased out by September 2021?
These are some of the reasons why fewer rental homes are coming into the market. However, as the government strives to meet its building target, rental properties will hopefully increase and satisfy the demand. As mentioned earlier, it’s unlikely that this will happen rapidly, but it’s a sign that UK rent might modestly decrease in the coming months.
