The latest DPS Rent index reveals that across most of the UK, renters are having to spend a greater percentage of their wages on rent than this time 12 months ago.
Overall average rents in the UK continue to show the resilience they’ve displayed since the start of the pandemic, growing to £804 in Q2 2021, a rise of £4 (0.5%) on the last quarter and up £22 (2.81%) on this time last year.
Average rents in London buck the national trend
Most regions of the country have seen rents grow or remain relatively static in the last quarter, but after returning to growth in Q1 2021 overall average rents in London have fallen again, from £1,325 in Q1 down to £1,314, a fall of -0.83%. Over the quarter, average rents fell for all property types in London, with the exception of semi-detached houses which rose £25 to £1,705 (1.49%).
Over the last 12 months, London is the only region to have seen average rents fall, hit hard by the decline in demand for flats as pandemic induced lockdowns and the switch to home working affected renters needs and property demand.
Average rents in London have fallen £31 (-2.30%) since Q2 2020, driven largely by a fall of £45 (-3.34%) in rental values for flats to £1,301. Annually, other property types in London have shown more alignment with the national demand for larger properties, with growth in rents of £40 (2.46%) for terraced housing, £39 (2.34%) for semi-detached homes, and £41 (2.38%) for detached properties.
The North East was the only region to show a fall in average rent greater than 1%, reducing £27 (-4.85%) to £530. This means it takes top spot as the cheapest region to live in the UK, displacing Yorkshire. However, when compared to Q2 2020, average rents in the North East are still up £6 (1.15%).
Rent inflation outpacing wage inflation in most parts of the UK.
The disparity of London rental growth with the rest of the UK is mirrored when comparing the percentage of wages spent on rent. The Capital is the only region where rental costs have reduced in comparison to average wages, falling -0.91% since Q2 2020. All other regions have seen the relative affordability of renting decrease as average rents outpace wage inflation. The South East region saw the highest percentage growth of 1.87% to 34.33% of wages spent on rent.
Though it’s become relatively more affordable in the past 12 months, London renters still have the highest percentage outlay, with 38.74% of salaries absorbed by rental costs, 7.84% above the national average.
As well as being the most affordable region in terms of average rents, the North East is also the most affordable when looking at rent as a percentage of average wage, with only 23.01% of earnings spent on rental costs. The North East also saw the smallest change in relative affordability since Q2 2020, rising only 0.26%.
“The figures for the second quarter of 2021 again suggest decreased demand for renting in London, particularly for smaller properties.
“Although average London rent increased slightly between January and March this year, the decline we’ve seen since reflects a broader trend of lower rents in the capital during the pandemic.
“The slight increase in average UK rents also reflects a continuation of the steady, general increase since Coronavirus arrived – particularly for semi-detached and detached homes.
“It seems likely that these figures reflect a continued desire among tenants to move away from cities, particularly because of changes such as homeworking, although with restrictions due to lift soon and with many companies making plans for a return to offices, we will have to see if the trend continues.”
Matt Trevett, Managing Director, The DPS
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