Return to City Centre Living Prompts Major Spike in Rent Costs
The suggestion that last year’s mass exodus from busy urban centres could prove to be permanent appears dead in the water. Not only are some towns and cities bouncing back from the declines of 2020, but some are currently seeing double-digit rent growth as supply struggles to keep up with demand.
Compounding the issue, private renters are still struggling with the economic impact of the pandemic and finding it increasingly difficult to afford today’s skyrocketing average monthly rent payments.
“A year of various lockdowns saw many city centres hit with either a complete standstill in rental growth, or falls of over 10% in some cases, as tenants moved further out or back in with family temporarily,” said Tim Bannister, director of property data at Rightmove.
“But as society opened up again cities have not only bounced back but are now seeing strong rental growth, fuelled by increased tenant demand and limited available stock.”
Average monthly rents outside London are accelerating fast; up an average of 8.6% compared to the same time last year. In Glasgow, Nottingham and Bristol, average monthly rents are now more than 10% higher than they were prior to the pandemic.
Monthly rent costs are also up by approximately 2.7% in London, which remains the most expensive part of the UK to rent a home privately.
The Tip of the Iceberg
Analysts and experts believe that we may only be seeing the beginnings of a much more frenzied and competitive return to city centre living.
“The race to find a rental property in the capital is set to become more competitive, putting landlords firmly in the driving seat of price negotiations,” said Chesterton’s estate agents head of lettings, Richard Davies.
“With demand outstripping supply, rents are now starting to increase and — if limited availability of rental properties continues — it won’t be long before rents return to 2019 levels.”
One of the less desirable property types during the pandemic, Rightmove’s figures indicate that competition for city centre flats among private tenants is now 95% higher than it was this time last year.
As average monthly rents continue to reach new record highs, research suggests that close to 10% of all private renters now fear they will fall behind on their payments before the end of this year.
“Renters live far closer to the edge of their finances at all times, because they have to spend so much of their income on rent,” commented personal finance analyst at Hargreaves Lansdown, Sarah Coles.
“There’s every chance that inflation could throw a spanner in the works. And while we’re struggling to get back on our feet, we also have to wrestle with rising prices across the board, that threaten to throw our budgets back into disarray,”
“Among renters it means more people can’t ever imagine buying a house of their own.”