As summer approaches, rental prices are heating up across England. According to the latest rental index from Goodlord, rents have hit their highest levels since October, continuing a trend that could see prices soar even further in the coming months.
In the past month alone, from April to May, rents increased by 1%, raising the average cost to £1,183 per calendar month (pcm). This 1.4% increase from April’s average of £1,166 is not just a monthly spike; it represents a significant yearly increase as well. Compared to the same period last year, rents have surged by 6%, indicating a strong upward trend.
The West Midlands saw the most substantial rise in rents this past month with a 4% increase, followed by the North West with a 2% rise. These regional increases are contributing to an overall uptrend in rental costs that is consistent throughout 2024, with an average year-on-year increase around 6-7%.
Record Highs and Rising Costs
May 2024’s rental costs have not only surpassed those of the previous months but have also broken records set last year. For reference, the highest average rent recorded was in October 2023 at £1,190pcm, and now, we’re seeing figures that surpass this peak. With the continuing trend, it’s likely we’ll see the first £1,400+ average rent in England in the upcoming months.
Void Periods – A Slight Relief?
While rents are on an upward trajectory, there is a slight silver lining for landlords. The average void period, the time a property remains unoccupied between tenancies, has increased to 21 days, up from 19 days in April. This 11% year-on-year increase in voids suggests a small easing in the market’s demand-supply imbalance, indicating that while rent prices are high, there is a bit more breathing room between tenancies.
Regions like Greater London and the East Midlands experienced the most significant increases in void lengths, both seeing a 20% rise.
Tenant Demographics and Earnings
Amidst these rising costs, the typical renter signing a new tenancy in May earns an annual salary of £37,095, which is slightly up by 0.8% from April’s £36,810. Salaries vary widely across regions, with the lowest average salaries found in the North East (£30,718) and the highest in Greater London (£49,883). The average age of renters remains consistent at 33 years.
What’s Next for Renters?
William Reeve, CEO of Goodlord, suggests that these data points might signal the beginning of the summer price escalations, a season traditionally marked by peak rental activity and costs. While the consistent rise in year-on-year rent prices aligns with previous patterns, there are emerging signs that market pressures might be starting to ease, as indicated by the increase in void periods. However, with rental costs still outpacing both inflation and earnings growth, the squeeze on renters is likely to continue, potentially pushing average rents to unprecedented levels.