Then there are the other decorations to find a home for and what about the outside lights, how big should we go? What will the new neighbours think? I digress, but even the smallest extra demands on space within our homes have been magnified over the past 18 months as huge swathes of people have been forced to work from home, home school and generally spend way more time in their homes than they even intended.
The space issue is a factor that has dominated the property market over the course of the pandemic from both a purchase and a rental perspective. This growing desire for more space continues to translate into higher costs for tenants and is leading landlords to reassess the types of properties being added to, and included within, their portfolios as larger family homes are in such high demand.
According to data collected by Hamptons in October, the average rent on a four-bed home in Great Britain rose to £1,949 pcm, up 10.6% on the same time last year and nearly triple the rate of growth of a one-bed which rose 3.7% year-on-year (£875 pcm). The gap between the monthly rent of a one and two-bed home is now reported to stand at its widest point since the firm’s records began in 2013. Strong rental growth has resulted in an average one-bed now costing the same amount as a two-bed did in 2016.
The cost of moving from a two-bed to a three-bed has also risen. A tenant now has to pay an extra £142 or 14% each month to trade up from a two- to three-bed home, £30 more than in October 2020. The average two-bed home now costs the same amount to rent each month as a three-bed did in 2018.
Nationally, rental growth remained resilient in October with rents rising 7.9% over the past 12 months, the fourth largest annual increase since the lettings index began in 2013. London remains the costliest region in the country to trade up, both in absolute and percentage terms. Outside the capital, rents continued to rise in double digits for the fifth month running, with average rents up 11.0% on the same time last year. With 47% fewer homes available to rent than at the same time in 2020, rental growth is set to remain buoyant into 2022.
The data is unusual in the fact that rental growth has always tended to remain fairly uniform no matter how large the home but, over the last year, it is suggested that the gap between rental growth on smaller and larger properties has widened to around 5%. Such figures certainly offer plenty of food for thought for landlords and investors as we move into the new year. This also highlights the importance/value of the advice process for a range of borrowers when it comes to any refinancing of individual properties or the restructuring of portfolios. And, in a similar vein to the desire for more space, this reliance on good, professional advice will only continue to move in one direction.
