Rental Growth On the Up!
As supply shortages ease, rental growth is on the up
Rents across Great Britain rose 8.8% over the last 12 months, according to analysis by letting agency Hamptons. It said the rise showed a slowing of growth from the 11.5% it recorded in May.
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The average monthly rent now stands at £1,163, which is up from £1,069 in the same month of last year.
Rents in London grew faster than anywhere else for the second month running. They rose 12.1% over the last 12 months, which puts the average monthly rent above the £2,000 mark for the first time on record.
A record annual growth rate of 35.1% was recorded for Inner London rents ‘as their strong recovery from the pandemic continued at pace’.
Despite record growth, at a monthly average of £2,675, rents in Inner London remain 6.5% below their October 2019 peak and sit just 1.6% above where they were in January 2020.
There are still 54% fewer homes than there were on the market than in June 2019 though, meaning that the number of rental homes on the market remains well down on pre-pandemic levels.
Good news ahead
But stock levels are now slowly rising across Southern England – excluding London – compared to this time last year, and there are 10% more homes to rent in the country than there were last June. (Although that was a record low).
Aneisha Beveridge, head of research at Hamptons, said:
Almost all the rise stems from record-breaking rents which have been driven by a lack of homes available to rent alongside investors passing on higher running costs to tenants. In particular, landlords have been squeezed by rising mortgage rates, alongside more expensive insurance premiums and maintenance costs.
Is now the time to invest?
Things are very much in flux at the moment, so it’s hard to give a definitive answer on that. It really depends on your goals and funds.
- First-time buyer: If you’re looking to invest in your first home, now might not be the time. With rising interest rates, you could be paying more back per month than you would if you were renting and, with stock so low, you might struggle to find the right place. We’d recommend that you keep saving and keep looking, so you are ready should the right place pop up. Make sure you talk to a mortgage advisor to see where you stand – with Mashroom, all of our mortgage advice is free
- Buy-to-let: If you’re looking to invest in a buy-to-let, definitely get some free mortgage advice! Buy-to-lets are slightly different to residential mortgages and you’ll want to make sure that you’ve budgeted for everything so there are no nasty financial surprises!
- Remortgage: If you were considering just staying with your current mortgage rather than face the hassle of remortgaging – think again! With interest rates going up across the board, you definitely want to speak to someone about shopping around and finding the right deal for you