The average number of potential tenants for each rental room on the market has risen from 3 to 4.1 in the past 12 months according to easyroommate.co.uk’s analysis of over 86,000 room rentals around the country, and 30,000 flathunters’ profiles.
In the last year, half as many first-time buyers have been able to secure mortgages compared to the average for the previous ten years. With 186,000 buyers kept off the property ladder, demand for rental accommodation is soaring. In the last year alone, the number of renters registering to find a room has risen by 58%. In contrast, the supply of rental rooms has increased more steadily, with an annual rise of 17%.
Jonathan Moore, director of easyroommate.co.uk, commented: “Rental demand has really moved up a gear in 2011, igniting competition across the flatshare market. In rental hotspots like central London, rooms and flats are being let within hours of being advertised. As the cost of renting a whole flat soars, a growing number of frustrated buyers are turning to flatshares as a cheaper alternative while they save for a deposit. With the average UK room rent standing at £360 pcm, flatsharers are spending half the amount they would on renting alone.
“But many homeowners haven’t yet woken up to the possibility of how much they can earn from renting out spare-rooms, and in many places, the supply isn’t rising to meet the demand. In hotspots like London, savvy homeowners are making an average of £6,250 per year – a sizeable chunk of yearly mortgage costs.”
Easyroommate’s analysis of over 50 of the UK’s largest towns and cities reveals competition for rental room has been fiercest in the South East, with an average of more than 13 potential tenants registering per room in Brighton. Oxford and London also featured in the five cities with the strongest demand per property, with an average of 7.2 and 6.7 tenants competing for each room respectively.
The concentrated demand has pushed up rents in these areas, with the average cost of a room in Brighton 16% above the national average, 19% higher in Cambridge, 11% in Oxford and 44% higher in London.
Jonathan Moore commented: “Demand has been especially buoyant in London and the South East, where the economy has outperformed the rest of the UK – and young professionals have been flocking for employment. But competition is also heating up in the larger student towns like Cambridge and Oxford. Thousands of students look to flatshare each year to save as the cost of university soars, but thousands more remain in the area after completing degrees, looking to live in affordable flatshares while they begin their careers.”
Only in West Bromwich did the supply of rental accommodation outweigh the demand, with an average of 0.8 tenants competing for each room. Salford and Stockport had an average of a tenant per room, while Slough and Telford both register an average of 1.7 tenants per room.
Jonathan Moore continued: “The relocation of BBC has done little to boost the rental market in Salford so far – and demand per room remains limited. In the Midlands and North of England, house prices have remained much more affordable, and there are fewer frustrated buyers reliant on rental accommodation. Proportionally fewer have to rely on renting, and this has kept a lid on rental inflation in many of these areas.”
