Are Rents Really as Expensive as Claimed?

Are Rents Really as Expensive as Claimed?

The news is full of how renting is extortionate and landlords exploit tenants… But is this actually true? Just how expensive is renting?

Recently, rents have performed strongly year-on-year, in line with earnings growth – almost for the first time since the start of the recession.

Rent price indices from LSL Property Services and Belvoir use advertised rents, showing the highest increases, while Countrywide studies prices for existing tenants, which although indicate growth, show rents rising at a much slower rate than for those new to the market.

This data shows that landlords do not exploit tenants with huge increases and reflects the true movements of the rental market.

Regionally, the Office for National Statistics (ONS) found that property prices range massively – from an average of £158,000 in the North East to 3.36 times that in London, at £531,000.

The lowest average rent is in the East Midlands, at £609 per month, with the typical rent in the capital set at £1,442 a month – just over double. This indicates that rents do not rise at the same rate as house prices. And although there have been some high increases, 8-10% annually, these are predominantly for newly advertised rental homes.

Countrywide found that for existing tenants (the majority), rent prices hardly rise at all.

Rent price growth should also be put into context. Since the recession, private sector rents dropped by between 5% in London and 20% in Nottingham. Since then, many increases have been reported as rises, but were simply recoveries. While rents in the East Midlands have grown by 6-8% yearly, today’s prices are only just back to levels recorded in 2008.

Ideally, rents should rise in line with inflation, meaning that landlords have, in fact, seen a price cut over the years.

How have your rent prices changed over the last few years? And do you believe this is correct?