The demand for rental homes increased by one-fifth in the United Kingdom between July and September compared to the same period last year, while the number of properties available for rent decreased by nine percent, with studio apartments in inner cities experiencing a surge in interest.
In the three months between July and September, the average monthly rent outside of London reached a record high of £1,162 on average per calendar month.
According to the research of 357,061 rents offered on the real estate website Rightmove, rent rates in London had the largest annual increase ever, climbing 16.1% to an average of £2,343 per month.
For just the third time in recorded history, national rentals increased by 3% during the previous three months.
Except for London, where the number of available rental properties decreased by 24%, the number of available rental properties increased everywhere else in the United Kingdom.
The demand for rental houses in the United Kingdom increased by 20% compared to the previous year, while the supply decreased by 9%.
According to Tim Hassell, director of Draker Lettings in London, the competition for houses is “severe.”
“Within a few hours of a property going up, we receive dozens of inquiries, which is unprecedented compared to the market pre-COVID.
Previously, we received between 5 and 10 inquiries in the first 48 hours. Now, we receive between 30 and 40 inquiries in the same time frame. This has also led to many proposals from tenants who are competing by exceeding the asking price and providing substantial money in advance.”
The regions with the biggest growth in the number of new rental homes were the South West (19% increase), Yorkshire and The Humber (12%), and Wales (10%).
Since former Chancellor Kwasi Kwarteng’s mini-budget, mortgage rates have risen, which has increased rental demand.
The data indicated that first-time purchasers may want to extend their lease rather than purchase a home, hence increasing demand for rental houses.
Due to higher mortgage payments, renting is less expensive than homeownership for first-time purchasers. According to an analysis by Rightmove, the average monthly mortgage payment for a first-time buyer with a 10% down payment is currently 20% higher than the rental payment for a comparable house.
Tim Bannister, director of property science at Rightmove, stated: “Those looking to rent a smaller property in the coming months may face increased competition from would-be first-time buyers whose purchase plans have been thwarted by the sudden rise in mortgage interest rates and who are now renting.”
As the cost of living constraints increase, renters have sought to downsize, and the demand for smaller dwellings has increased.
From July to September, the demand for studio apartments surged in particular.
The data revealed that there were four times as many tenants looking for a studio apartment as there were studio apartments available, a 71% rise over the previous year.
The popularity of city-center locations grew.
John O’Malley, the chief executive officer of Pacitti Jones in Glasgow, stated, “As a result of the dramatic increase in the cost of living, we are now beginning to observe older people downsizing to apartments to reduce their household bills – and is centrally located, they will also reduce their travel costs. This is something we anticipate seeing more of.”
