Since the lifting of lockdown in May, the lettings market has mirrored the buoyant sales market with a rising numbers of renters being partly driven by the desire for more space.
With rental demand increasing, rents rose in five of the eight regions in Great Britain. The strongest rental growth was seen in the South West (3.6%), Midlands (2.6%), the North (2.5%) and Wales (3.9%), compared to London (-3.9%) which saw year-on-year rent falls in August.
Falling rents in the capital continue to be driven by rising stock levels. London remains the only region of the country where there are more homes to rent (+34%) than at the same time last year. Across Great Britain, there were 11% fewer homes available to rent than in August 2019, with Northern regions recording some of the largest falls. The volume of tenants outstripping number of rentals was most evident in the North East, which saw the largest decline, with 45% fewer homes to rent than at the same time last year.
With the trend in renters desiring more space, this has meant an increase in the number of tenants leaving cities and moving to smaller towns or suburbs in order to upsize. Demand from applicants looking to rent has risen 1% year-on-year in small towns and suburbs across Great Britain.
In the four months between May and August, 34% of tenants that moved home upsized, adding at least one extra bedroom. This compares to 25% during the first three months of the year. 25% of moves post-lockdown were from a flat to a house. This compares to 16% during the pre-pandemic period in the first three months of 2020.
Upsizing tenants added an average of 1.4 bedrooms between May and August, paying an additional 23% in rent. In cash terms this equates to an average of £149 per month more.
Tenants living in the South East were most likely to trade up, with 47% of those moving post- lockdown adding at least one bedroom in their move and spending an additional £266 pcm on average. The South East was followed by the North West (37% adding at least one bedroom) and then London (where 33% added at least one bedroom).
It’s clear that renters have joined homeowners in the race for space by moving to the suburbs where the number of tenants looking to rent is up on last year. As we've discussed in previous updates, the volume of tenants looking for rentals continues to outstrip the supply of homes available to rent and it will be interesting to see whether this theme lasts or landlords start expanding their portfolios.
Source: Hamptons International