Rental boom in rest of UK eclipses London's decline

·3-min read
LONDON, ENGLAND - OCTOBER 26: Letting signs are seen outside properties in Maida Vale on October 26, 2020 in London, England. As many young people renting rooms have left the capital due to the Coronavirus Pandemic, rents are dropping and in some places have fallen by a third. Aldgate has seen a 34% fall in price per room, whilst prices in Little Venice and Maida Vale dropped by 20%. The average rent drop for a room in London's Zone one dropped by 11% in comparison to this time last year. (Photo by Peter Summers/Getty Images)
Growth in the price of rent in the rest of the UK is outpacing London. Photo: Peter Summers/Getty Images

The race to leave London in search of outside space and better working from home conditions has hit the rental market, as UK average rents outside of London soar to higher levels and drop in the capital.

According to Homelet's rental index for May, the average rent in the UK is now £997 ($1407), up by 4% on the same time last year and another record-high average price.

The trends reported within the HomeLet rental index are from data on actual achieved rental values for just-agreed tenancies arranged in the most recent period – providing an in-depth insight into the lettings market and what’s happening right now across the UK.

Every region bar London saw a rise in rent prices year-on-year – when excluding London, the average rent in the UK is now £854, up by 6.4% on last year.

Meanwhile, rents in London continued to drop year-on-year to £1,583, down by 0.9% on last year, the twelfth decrease in annual variance in subsequent months.

Read more: Brits sick of working from home as vast majority want partial return to office

The East of England saw the most significant year-on-year price rise of 8.5% since this time last year.

Annual variance in UK rent. Chart: Homlet
Annual variance in UK rent. Chart: Homlet

Scotland also benefited from the boom, seeing the most significant month-on-month price rise, with the average price rising 2.6% to £707 a month in May.

Rent prices in the East Midlands fall by 0.7% compared to last month – and are now sitting at an average price of £704 per month.

“Rental properties continue to play a crucial role in meeting the demands of people up and down the country, and the flexibility and responsiveness shown by the private rental sector will be vital in the coming months as the country opens up again," said Andy Halstead, HomeLet & Let Alliance CEO.

"As rents increase, we’ve also seen an increase of over 10% in suspicious and fraudulent applications for let property; with backlogs and delays in processing evictions, the demand for high-quality tenant reference and insurances has never been higher."

The data comes amid new research which has shown that renting is still cheaper than buying a home. 

Hamptons estate agency found that before the pandemic began in March 2020, people buying with a 10% deposit would have been better off than renters by £102 a month.

Read more: 'Last in, first out' fears holding back UK workers from changing jobs as vacancies soar

But last month, it found the average private sector tenant was better off, spending £71 a month less in rent.

There are now only four areas in the UK where it is cheaper to buy than rent: North East, North West, Yorkshire and Humber, and Scotland.

Watch: How much money do I need to buy a house?

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