London sees the first price increase for over a year, with an annual variance increase of 1.5% to £1,607 PCM. However, the price is still lower than pre-COVID, as the average was £1,611 PCM back in June 2019. With the capital excluded, the average UK rent price is 8% higher than last year, up to £861 PCM, showing a 10% growth on pre-Covid prices.
The highest annual price rises were seen in the South West of England, with the current average price of £948 PCM marking a 10.5% increase on this time last year, and a 12.6% increase on pre-Covid levels. Scotland saw the most significant MOM price rise, with the average price rising 4.4% to £738 PCM in June.
Elsewhere, rent prices in the North East fell by 2.3% compared to last month to an average of £547 PCM, one of only two regions to see a MOM price dip.
Andy Halstead, HomeLet & Let Alliance Chief Executive Officer, comments: “Throughout the Coronavirus pandemic, the Government rightly took measures to protect tenants but didn’t go far enough to balance the protection for landlords. It’s a continuation of the theme that we’ve seen for many years, with landlords being penalised by higher taxes and increased complexity in obtaining possession of their properties.
“In simple terms, increased costs for landlords mean increased costs for tenants. Some landlords have exited the market whilst the stamp duty holiday has stimulated the sales market, impacting the stock level. These are all factors driving an increase in rental values for new tenancies, which are way above the rate of inflation.
“The private rented sector plays a critical role in the UK’s housing market. As restrictions begin to ease, the flexibility provided by rentals will be crucial to mobility across the UK and as a means to access affordable housing that fits the varying needs of a diverse range of tenants.
“The sector works best when there’s a mutual balance between tenants, landlords and letting agents. The Government can’t treat the rental market as an afterthought. Policies that solely focuses on homeownership will only deepen the issues in the UK’s housing market.
“Some people might be shocked to see the average UK rental price tip over the £1000 mark, yet supply and demand dynamics will only continue to drive rental prices upwards for the rest of the year, and we’ll see more records broken in 2021.”
Commenting specifically on London, Halstead, said: “The impact of Brexit on international tenants has been exacerbated by the pandemic, noticeably in London. Positively, this month we can see the demand for rental properties in London growing, not only through the increase in rents but also the volume of new lets that we’ve seen in the Capital.
“After a year where demand and rental values have dipped, we can expect to see growth again as the impact of the pandemic gradually subsides.”
