Are Rental Prices Going Up or Down?
Generation rent. Let’s talk about that. In recent years there has been a growing stigma attached to this demographic. The university graduates who return home to mum and dad’s house and pay £50 per week for their childhood bedroom, and the endless 20 and 30 something's scraping every last penny together towards that 10% deposit on a house of their own. Some millennials have it tough. Gone are the days from our parents era where they would buy their first house and have a big white wedding all in the same year. Now these things take time and saving, and whilst there are solutions such as help to buy schemes and shared ownership, the number of people aged 25-34 who are renting houses privately has soared from 27% in 2006/07 to 46%, according to figures released earlier this year.
The Times’ Bricks and Mortar instalment, which features prominently in Hopewiser’s location series, states average UK rental prices have grown at the slowest rate since December 2010, reaching 0.9% in July 2018. This could be a contributing factor to the 74% increase of private renters for all demographics over the past decade, which has ammounted to 4.7 million. But our main questions are, whereabouts are rental prices increasing/decreasing? And why is this happening? Our love for addresses propels us to take a closer look.
In London, rental prices fell by 0.3% in July, making it the fourth consecutive monthly decrease. Yay for generation rent, nay for landlords. Or is that the case?. Lawrence Bowles of Savills believes that this fall in the cost of rent has prompted landlords to “get tenants in before things get any worse” and are now willing to provide longer tenancies. In some cases, tenants are required to sign two-year contracts so that the property will be occupied for that length of time at minimum. This will bode well for landlords because in the event of a further decrease in rental prices, at least their tenants will be bounded by a fixed rate that was outlined prior to the fall. Landlords 1, renters 0, it would seem. I still wouldn’t be so sure on that one.
As we ponder over the various possible reasons for a fall in rental prices, we are reminded that the overall high cost of living in London could be a deal breaker. Bowles goes on to tell The Times, “We are seeing the growth of cities such as Nottingham as London’s high costs push employers and jobs elsewhere.” According to The Guardian, the number of Londoners abandoning the capital hit a 10-year high in 2017, with nearly every part of England and Wales opening their doors to an ex-Londoner. In fact 4200 was the total recorded in mid 2016. It could be argued that people are fed up of the high costs that come with capital city living, choosing to up sticks and move somewhere more affordable instead.
According to ONS, the East Midlands is the fastest growing region in the UK with an individual rental growth of 2.7% in the past year. It is also the fastest growing in terms of UK housing prices. With an average rental price of only £656pcm compared to London’s £1273pcm, it’s clear to see why more and more people are uprooting from the South to seek financial solace in the Midlands. Did you know that a total of 5,790 people left the capital last year to live in Nottinghamshire? And Nottingham alone has given the district the third highest employment growth within the past 12 months, adding 15,100 jobs according to figures from Oxford Economics. Maybe we should all consider Nottingham when planning our next move.
Not only are renters facing lower costs and more job opportunities in the Midlands, they can also look forward to more space. Hurrah! The average price of renting a two-bedroom flat in London at £1571pcm, is less than renting a four-bedroom detached house with a large garden and garage in West Bridgford, Nottinghamshire at £1550pcm. Sounds like a no brainer to us!
It makes sense that rental prices are on the rise, because let’s be honest, the more demand there is for something, the higher the price is going to be. And even with a 2.7% increase, the amount of money that renters will save on the cost of living compared to living in places like London means they could use their savings for other pleasures in life, such as a nice holiday or three *coughs* sorry...deposit. Priorities, remember!
If you are a Londoner that is looking to escape the clutching costs of the city but are wanting to remain within commuting distance, the Bricks and Mortar article suggests Northampton. For £1800pcm you could bag yourself a five-bedroom Victorian house with a garage and sizeable garden. Happy Days!
Before you pack your bags though you should read the following. Given that the average rental cost of a two-bedroom house in the wider district rose by 24% between 2011-2017, this would suggest that overall rental prices have risen as well. This is probably due to more and more people migrating to commuter belts. So make sure you consider this and evaluate whether you will actually be saving any money.
We are still lumbered with the question as to why people are renting and not buying? The most obvious answer is saving for that deposit. But The Times also express that the uncertainty of Brexit is leading to more and more potential buyers opting to rent instead. That way, in the event of a no-deal Brexit, renters can always do a midnight flit elsewhere and start afresh. Fingers crossed it won’t come to that.
To summarise, it looks like renters are here to stay and with an increasing demand to get out of London, landlords in other regions are able to cash-in by increasing rental prices. That said, the cheaper the rates get in London, people may be able to rent for a more reasonable price in the capital, compared to previous costs.
Nobody knows what the future holds for generation rent, but what Hopewiser does know is that with more and more people relocating, these uncertain times make it now more important than ever for your business to update your customer database. After all, you wouldn’t want to send their purchases to the wrong address, would you? With our new online Address Cleanse solution, all you need to do is simply upload your data and we’ll instantly cleanse and suppress your files. It’s as simple as that. Clean, compliant, and clutter-free data. Perfect. Get in touch today!