Market Insight - April / May 2019
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HOW MUCH RENT DO TENANTS PAY?

 

Tenants spent £59.1 billion on rent in 2018, the first annual fall in over a decade.

Last year, the total amount of rent paid by tenants fell for the first time in more than a decade. Despite average rents rising 0.4% in 2018, fewer people renting homes meant the total rent bill shrank by £1.9 billion since 2017.

Last year private tenants in Great Britain paid £59.1 billion on rent, down from £60.9 billion in 2017. The latest results from the English Housing Survey found that the number of households privately renting fell by 3.5% on the previous year to £4.5 million. Perhaps surprising to some, the fall in the number of renters came amidst more people purchasing homes. Government schemes such as Help to Buy have backed the change as the number of mortgaged households rose for the first time in a decade.

However, the increase in taxation on buy-to-let purchases and the removal of various tax reliefs for existing landlords has caused some investors to leave the sector, contributing to the fall in the number of homes available to rent. Since the stamp duty surcharge on second homes was introduced in April 2016, we estimate that 120,000 landlords have sold up.

Total rent bill in Great Britain (£ billions)

 

Source: Hamptons International

Despite fewer properties available to rent, rental growth has remained quite sluggish over the last year. Affordability seems to be an issue for tenants too which has kept a cap on rental growth. This is particularly true in London and parts of the South where rents are most misaligned from incomes.

London saw the biggest drop off in the total amount of rent paid by tenants. In the capital tenants paid £20.6 billion in rent in 2018, £0.62 billion less than in 2017. Nevertheless, over the last 10 years the rental bill has increased in every region. The biggest rise in the amount of rent paid by tenants was in London. Where the total rental bill grew by £10.53 billion over the 10-year period. After London, tenants in the South East (£14.19 billion) and the East (£3.05 billion) saw their rental bills rise the most. Meanwhile Wales saw the smallest rise in the total amount of rent paid by tenants over the last decade, up £0.07 billion.

New Let Rental Growth

Over the last 12 months, rental growth in Great Britain has slowed. Rental growth has fallen from 2.4% in January 2018 to 0.6% in February 2019. The slowdown over the last year was mainly driven by London rents falling, but towards the end of 2018 rents gradually started rising again in the capital. Meanwhile, the South East and South West both recorded falling rents last month.

Source: Hamptons International

 

 

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