In the second quarter, the average asking rent for new tenants in London reached a record high as a result of soaring demand and rising mortgage rates.
Tenants in the capital are currently being requested to pay an average of 2,567 pounds ($3,310) per month, which is an increase of 28 percent over the same period in 2019 prior to the epidemic and 13.7% from a year ago. Outside of London, asking rentals have also reached a new high of 1,231 pounds per month, a third more than in 2019 and 9.3% more than in 2018.
Rising rents exacerbate the cost-of-living challenges millions of households are already experiencing and might present a challenge for both main political parties in the run-up to the general election that is anticipated for next year. Tenants are now scrambling to locate a new place to live in a market where housing is in scarce supply or pay the huge hikes asked by landlords.
“The themes dominating the lettings market continue to be low supply and high demand,” said Allison Thompson, national lettings managing director of estate agent Leaders Romans Group.
The Rightmove statistics outperform official data that considers the whole inventory of rental properties. According to that statistic from the Office for National Statistics, private tenants’ rent payments in the UK climbed by 5.1% in the year to June, which is the highest increase since the start of official records in 2016. Just in London, rents increased by 5.3%.
Some heavily leveraged landlords are being forced to sell their properties due to rising interest rates. Rightmove said that 16% of homes listed for sale had previously been rented, up from 13% in January 2019. However, according to Thompson, there has been a rise in the number of renters and the majority of the landlords she has worked with are mortgage-free.
According to Rightmove, the shortage of supply has slightly lessened. Tenant demand had increased by 3%, while the number of rental properties was up 7% from a year earlier in the second quarter.
However, according to Rightmove, it only takes 17 days on average to locate a tenant for a vacant house. That is the quickest since November of last year.
According to data from the property portal, the housing market is under pressure due to a lack of supply, rising interest rates, and a rise in demand for rentals. Rental costs outside of London only increased by 8% between 2015 and 2019.
“Average asking rents for new tenants have risen at a rapid pace since the pandemic reflecting the significant increase in demand, which is driven by a combination of factors including changed housing needs such as some space to work from home,” said Rightmove’s director of property science Tim Bannister.