Rental growth outside the capital accelerates

February 2021

January 2021 Lettings Index

Nationally the rate of rental growth picked up for the sixth month running.  Across Great Britain rents rose 4.3% in January 2021, up from 4.1% in December.  A shortage of stock outside city centres has seen landlords push rents to above what they were achieving pre-COVID.  In January more than two-thirds of landlords letting a home in Great Britain achieved a higher rent than they had previously let it for, and by an average of £60 per month.

The South East topped the rental growth stakes, recording a 10.0% increase in rents over the last 12 months.  This marked the first time a region outside London recorded double-digit rental growth since Hamptons records began in 2012.

This growth has been driven by falling numbers of rental homes on the market, with 14% fewer rental properties available to rent than in January 2020.  With the exception of London, every region recorded double-digit falls in the number of rental homes on the market between January 2020 and January 2021.

Rental growth in London remained positive for the fourth straight month, rising 1.0% compared to January 2020.  However, this growth masks an Inner-Outer divide with Inner London rents falling 15.9% year-on-year and Outer London rents rising 6.2%.  This pandemic-induced divide means Inner London rents stand just 24% higher than Outer London rents, down from a differential of 100% in April 2013.

Given the average home in Inner London cost £2,213 per month in January, rents in London’s inner zones now cost 17% less than they did eight years ago in January 2013 when the index began.