The rental market across England is undergoing significant changes, with the gap between average rents in the North and South narrowing to levels not seen for over ten years. According to recent data released by property company Hamptons, the average rent for properties in the North hit £960 per month, marking a 9.6% increase from the previous year. Meanwhile, the average rent in the South surged to £1,317 monthly, resulting in what experts describe as 'the closest price point observed since records began.
This decrease in the rental price gap highlights the shifting dynamics of the rental market. For perspective, just last year, the difference between rents was 43%, and it peaked as high as 55% back in 2021. These figures indicate not only an increase of rents in the North but also showcase the southern market's sluggish growth caused by affordability pressures.
So why is this happening? Aneisha Beveridge, head of research at Hamptons, notes this trend has been developing over the last five years, indicating broader market transformations affecting both rental and homebuying sectors. "It’s only been the last year where we’ve seen the gap close more rapidly, attributed to affordability constraints felt by renters in the South," Beveridge points out. Many southern renters are already facing steep monthly costs, limiting the potential for even higher rents.
Rising wage levels and housing demand have consistently impacted property prices, but the growth rate for rents has sharply declined across the South due to affordability issues. This general trend is reflected across various regions; rents increased by only 5% year-on-year across southern England, compared to the significantly higher rate seen previously.
When breaking down the data, specific regions experienced varied rates of increase. For example, the North East saw the most substantial rise, with rents soaring by 12.1%, highlighting how certain areas are catching up. On the contrary, London experienced only marginal growth of 2.1%, substantially down from the 17.1% growth seen last year. While renters up North may find themselves paying less, they are still catching up quickly.
From the perspective of overall rental growth rates, Hamptons noted the average rent for newly let properties across Great Britain peaked at 12% last summer, significantly above the pre-pandemic average of 2.5%. This year, growth has dropped off to around 5%, the lowest since April 2021, painting a subtler picture of the rental market's state. Despite the fact the South still commands higher average rents, the decrease is acknowledged as landlords wrestle with higher operational costs cumulatively eating away at profit margins.
Beveridge adds, "The closing of the North-South rental divide mirrors what's been happening with property prices - both reflect gradual trends where Northern areas are catching up with their southern counterparts. Still, the pressures faced by tenants and landlords alike mean this trend is nuanced. The costs landlords incur account for nearly half of their monthly rental income, leaving little room for increased rents."
This shifting rental dynamic coincides with legislative changes impacting renters' rights across England. The recent introduction of the Renters Reform Bill, which prohibits no-fault evictions, indicates governmental efforts to provide greater security for tenants. Landlords, represented by the National Residential Landlords Association, have expressed concerns about these changes potentially leading to rent increases as property owners adapt to new regulations.
The overall implication of these trends could signify changing perceptions about renting. The shrinking gap may encourage some southern renters to explore opportunities above the border, where prices remain relatively attractive, even if increasing. Increasing affordability pressures combined with legislative changes indicate complex adjustments renters will confront moving forward.
Experts anticipate continued scrutiny as renters navigate these shifts, and the overall impact on the market moving forward remains to be fully seen. With the ever-changing rental scene, renters everywhere need to stay on top of their rights and possibilities.
Despite the market's volatility, one thing is for certain: renting across England remains increasingly challenging year after year, with the gulf between northern and southern rents shrinking. Renters face pressures from all sides as they continue to adapt to ever-evolving dynamics.
