North West Sees Highest Rental Growth in England
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Average UK Monthly Rent Now Stands at £1220 - Zoopla
Rental growth is continuing on its upward trajectory, according to the latest data from Zoopla, with UK renters now paying an average of £1220 per month.
According to the research, the average UK rent has risen 8.3% in the last year, adding £1100 to the average rental cost for a year in cash terms, or £90 per month.
Rental growth has accelerated sharply over the past three years due to the continuing supply-demand imbalance in the UK private rental market.
Zoopla states that it seems the market has moved past peak growth. After nearly two years of double-digit percentage increases, this is the lowest rate of inflation seen in the housing market. However, this is still a considerable rise, and the slowdown seems to affect different UK regions at substantially different rates.
These regional differences are essential to consider when searching for the best place to buy a buy-to-let property.
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North West Rents Display Annual Rise of 10.2%
Predictably, average rents in the South of England are much higher than those in the North. As usual, London had the highest average monthly rent, a hefty £2119. The most affordable rent can be found in the North East, where tenants typically pay £695 per month.
However, rental growth has been slowing down, and buy-to-let in London has been particularly affected, as the capital appears to have hit an affordability ceiling. According to the latest data, rental inflation in the city has dropped from +16.1% a year ago to +6.4. Zoopla believes there will be a further slowdown in rental growth this year due to resistance to higher rent in the most expensive markets.
However, less pricey regions are still registering considerable annual growth. Two areas even experienced double-digit percentage changes. Namely, the North West had +10.2%, adding £80 to the average rent to bring it to £847, and Scotland jumped up +11.6% to now stand at £791 after growth of £80.
Scotland will likely continue to show the fastest rental inflation due to the rent cap introduced in September 2022. Regions in Northern England, such as the North West, are also expected to keep experiencing rental growth as there is still room for affordability.
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Why is UK Rent Going Up at Such a Fast Pace?
As mentioned, demand is one of the primary drivers of rental inflation, and the UK market has been experiencing a supply-demand imbalance for three years. According to Zoopla, this is the main reason rent has been going up rapidly during this time.
Other factors include earnings growth and mortgage rates. A strong job market and wage rises have helped maintain high demand and allowed for rent increases. The higher mortgage rates have also kept more renters in the market, preventing many from becoming homeowners. As more people opt for long-term renting, it has led to a boost in demand, especially with investment property in Birmingham and other areas.
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Will UK Rents Continue Increasing in 2024?
It seems that the undersupply of private rental properties won’t let up any time soon, suggesting growth will continue, albeit at a slower pace. According to the Savills Residential Forecast, the mainstream rental value looks to grow by 6% on average in the UK during 2024.
While Zoopla believes peak rental growth is behind us, regional differences have been observed. London seems to have reached an affordability ceiling, and growth has slowed substantially, while many northern regions continue showing sizable growth.
To learn more about the UK rental market, take a look at some of our latest buy-to-let area guides covering topics such as investment property available in Poole and buy-to-let property in Southend-on-Sea.
North West Sees Highest Rental Growth in England
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