September 2015 saw rents in England and Wales hit their highest levels on record under the sustained demand for rental property.
- Rents in England and Wales saw 6.3% year-on-year growth in September, with the average rate of £816pcm a new record high
- When compared with inflation growth levels, rents have risen by 10.3% in real terms since 2010
- Britain’s demand for rental property will see over 50% of UK 20 to 39-year-olds in the private rented sector by 2025
Changing attitudes towards homeownership in the UK continue to have a profound impact on the performance of the private rented sector (PRS).
In September, rents in England and Wales reached a new all-time record high. Figures from Your Move and Reeds Rains’ latest buy-to-let index show that monthly rates in September averaged £816, rising 1.6% and representing a 6.3% year-on-year uplift.
When taking inflation into consideration, the acceleration of rental rates is perhaps even starker. Performance trends in the PRS have become increasingly divergent from those of wider inflation. Indeed, the Office for National Statistics report that, despite the growth of rental rates, consumer prices in September 2015 are actually 0.1% lower than they were 12 months previous.
In comparison, rental rates are now 24.4% higher than they were in January 2010, while inflation is just 14.1% higher over the same time period. In real terms, this means that rents have risen by 10.3% in the last five years.
Adrian Gill, Director of Reeds Rains and Your Move, said: “Rents are rising strongly in real terms due to the recent acceleration in wages, and the much deeper and longer term shortage of available properties across the UK of all tenures.”
Demand for property in the PRS is far outstripping supply. Forecasts suggest that by 2025 over 50% of 20 to 39-year-olds will be renting in the PRS, making the sector increasingly appealing to institutional investors from around the world.