Rents continue to rise across the UK
The increase in rents after the height of the COVID-19 pandemic saw a record number of London tenants leave the capital in 2022, letting agent Hamptons reported.
Its latest monthly lettings index showed that 40% of renters moving home in London chose to leave the capital last year, up from just 28% a decade ago. This equated to 90,370 households, with the numbers doubling since 2012.
Just over 718,000 tenants have left over the last decade, 62% of which were longer-term tenants who moved into their home at least four years ago.
Hamptons noted that while the number of homeowners is nearly double the number of renters in the capital, tenants tend to move home more often and are much more likely to leave, with 62,210 homeowners moving in 2022 compared to the more than 90,000 tenants. This marks a return to form and a reversal of 2021 when more homeowners than renters left during a single year for the only time during the last decade.
“The rapid recovery of London rents over the last year has left record numbers of tenants looking around for cheaper options,” Aneisha Beveridge (pictured), head of research at Hamptons, commented. “While the commuter belt is often prohibitively expensive for would-be first-time buyers, low yields mean renting remains relatively affordable compared to buying. The number of homes on the market here has increased faster than in the capital this year, tempting tenants to cross the M25.
“We expect the number of renters leaving the capital to continue rising for the foreseeable future. London leavers are generally in their mid to late 30s, seeking more space for a family or simply for a quieter life. But as younger generations are less likely to own their own home, leavers are increasingly likely to be renters rather than homeowners.”
Hamptons said that the pandemic and the subsequent rise of flexible working had also resulted in fewer London tenants leaving the capital for work. Just 22% of leavers in 2022 left for work related reasons, down from 32% five years ago.
Due to more remote work opportunities, leavers increasingly keep their job in the capital while working remotely or commuting back occasionally. Tenants are instead leaving to make their rent go further and renting larger homes in nicer neighbourhoods, Hamptons reported.
Leavers disproportionately come from the least affluent corners of the capital, with over two-thirds, or 68%, of renters leaving London coming from the 50% most deprived areas, a figure which has steadily climbed over the last decade. The index also showed that despite trading up to live in a more affluent area, leavers were still able to move to a home which was 28% cheaper than where they were previously living.
These leavers also do not tend to move far, according to Hamptons, as each of the top 10 local authorities that most tenants move to directly border London. Tandridge topped the list with more than 52% of tenants in the area moving from London.
Rental growth shows no signs of slowdown
The January 2023 Hamptons Monthly Lettings Index also reported continued rental growth across the UK, with average rents increasing by 8.3% last month compared with the same time last year.
Rents rose strongly across the country, with the Midlands and North of England both recording double-digit increases of 11.2% and 11% respectively.
Meanwhile, the pace of rental growth in London eased slightly to 9.1% as Inner London rents completed their catch up to pre-COVID levels, slowing the headline rate of growth across the capital as a whole.
“While house price growth continues to slow, rents show few signs of deviating from their upward trajectory,” Beveridge said. “The number of homes coming on to the market remains well below pre-COVID levels, with landlords facing tough decisions as to whether the arithmetic still works if and when mortgage rates expire. However, the downward drift in interest rates will bring some relief for those who need to remortgage in 2023.”
The Hamptons Lettings Index, which has been running since 2012, uses data from the Countrywide Group to track changes to the cost of renting. The index is based on the 90,000 homes let and managed by Countrywide each year, adjusting for their location and type. It is based on achieved rather than advertised rents.
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