The rental market in the UK remains incredibly competitive, with high demand and rising prices persisting throughout August. According to the latest rental index from Goodlord, average rents increased by 10% compared to the previous year, albeit falling slightly from the record-breaking highs seen in July. While there was a slight easing in void periods, they remained significantly lower than previous year-to-date averages. This article will delve into the details of the rental market in August, exploring the factors contributing to the soaring prices and what this means for potential investors.
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The average price of rent decreased by 1.5% between July and August, with the national average in England reaching £1,347 per property. Goodlord’s chief executive, William Reeve, explains that this dip in average rents and the slightly longer void periods in August can be attributed to the numerous records broken in the previous month. He said, “However, when you look at the bigger picture, the market is clearly still running extremely hot. Year-on-year averages for rental costs are significantly increased, with the £1,300 per month barrier now broken for a second month in a row.”
The annual influx of student lets during the summer usually drives up rental prices. However, this year, historic pressures are playing a significant role in pushing prices to record-breaking highs, surpassing the typical student-driven increases. Greater London and the South East witnessed the largest rise in average rental prices, with prices in the capital increasing by 8%. Meanwhile, tenants in the South East faced the most significant rent rise, with prices jumping by 14%. On the other hand, the North West experienced a 20% decrease in average rental prices, following the pattern observed last year. Additionally, the North East and South West saw rental prices drop by 6% and 10% respectively; however, both regions experienced substantial rent increases in July.
When examining void periods, there was a slight cooling off in August compared to the intense levels observed in July. The average void period increased from nine days to 13 days, making August the second-lowest month for voids since July 2022. The South West had the most significant shift, with void periods rising from six to 13 days.
Conclusion
August continued to highlight the red-hot nature of the UK rental market, with rents remaining high and void periods remaining relatively low. While there was a slight dip in average rents compared to July’s record-breaking month, the year-on-year averages still indicate a significant increase in rental costs. As September typically brings the peak in rental prices, it is likely that high rents and short void periods will persist for another month before any seasonal shift occurs. These market conditions, driven by both historic pressures and the annual influx of student lets, present potential opportunities and considerations for property investors. It is crucial for investors to carefully analyze the ongoing trends, regional variations, and long-term market dynamics in order to make informed decisions.