April 2023 marked a significant milestone in the rental market, as the average monthly rent for a newly let property outside London surpassed £1,000 for the first time. This comes only 34 months after Great Britain, including London, last reached the same milestone in July 2020. With an annual increase of 7.8%, the average rent outside the capital has risen 26% since pre-pandemic levels in February 2020. As a result, the average tenant moving into a new home outside London will face paying an extra £868 in rent annually compared to last year.
Among the 10 regions outside London, three have seen average rents exceed £1,000 per calendar month (pcm): the East of England, the South West, and the South East. This striking growth has its roots back in February 2013 when the average rent for a tenant moving into a new home outside London was a mere £677 pcm. Since then, average rents have passed four £100 pcm milestones, with three occurring post-pandemic. The £900 pcm mark was surpassed just 21 months ago in August 2021.
Across Great Britain, rental growth continues at pace with an 11.1% year-on-year increase in April 2023, reaching a new high of £1,249 pcm. This is the second strongest month for rental growth on record, only outpaced by the 11.5% annual increase seen in May 2022. Overall, rents across Great Britain have risen by 25% since the eve of the pandemic, costing tenants an extra £2,962 per year. Even so, rents have failed to keep pace with wider inflation for nine of the last 12 months.
London continues to fuel rental growth. In April 2023, the average rent for a newly let property in Greater London reached £2,210 pcm - 17.2% higher than the same month the previous year. This also marks the first time the average monthly rent in the capital exceeded £2,200 pcm, costing the average tenant an additional £3,895 per year when moving into a new rental home.
Inner London continues to lead the charge, with average monthly rents crossing the £3,000 pcm mark for the first time in March 2023 and rising to £3,138 in April. This represents a 24.9% or £625 pcm increase compared to the same month last year. Consequently, the gap between Inner and Outer London rents has widened to £1,104 (or 54%), up from a post-pandemic low of just £221 (or 13%) in June 2021.
Outer London also experienced significant growth, with rents increasing by 15.1% year-on-year in April. This follows the region's average rent surpassing £2,000 pcm for the first time in November 2022. However, rental growth in London since the pandemic has lagged behind the rest of the country. Inner London has seen a 21% increase since February 2020, while Outer London has experienced 22% growth. In contrast, the South West, North West, and North East have recorded the strongest growth, with rents up 31% since Covid began.
In April 2023, average rents reached new records in seven out of Great Britain's 11 regions. Wales, the South West, and the North East were the only regions where average rents remained slightly below their peak. Scotland, like London, also saw double-digit rental growth (12.8%) in April for properties where a new tenant moved in.
With rents continuing to rise on the open market, tenants are left with the decision to either stay put or move to a smaller home in a more affordable area. While tenants who choose to remain in their current homes generally face smaller rental increases compared to those who move, they are not entirely immune to the cost pressures. Affordability constraints are expected to slow rental growth at some point this year; however, it is unlikely to decelerate significantly due to the number of landlords seeking to pass on their rising costs.