Figures released today by the Office for National Statistics reveal that after almost a decade in the doldrums, wages are finally on an upward trend. Compared with a year earlier, says the BBC, wages excluding bonuses rose by 3.2%. This is the biggest rise since the end of 2008.
This is great news after years of wage stagnation. But for renters, less encouraging is the news that rents have also increased. According to the latest figures from HomeLet, the average cost of renting a property outside London rose by 1.7% in the 12 months to October. And tenants in the capital faced an even bigger jump of 4%, according to the referencing firm.
HomeLet’s rental index is based on new rental contracts agreed by landlords and agents using its referencing service. It reveals that the average rent in the UK hit £928 per calendar month in October – up 2.1% on the same month in 2017. Outside London, the average rent in the UK is now £768pcm. Within Greater London tenants are paying an average monthly rental of £1,543pcm. Perhaps most surprising is that rents are increasing even faster than London in Northern Ireland and Scotland – which showed a 4.5% and 4.2% rise respectively over the last 12 months. The average rent in Northern Ireland is £653 pcm and £647pcm in Scotland.
However, rent rises are not the whole story. In the last 10 years the Consumer Price Index, which measures the average cost of goods and services, has overtaken rents, with the East of England and London the only areas where rental growth has outpaced inflation. What this means is that in real terms, in most parts of the country, rental payments have actually become more affordable. According to Hamptons International, which monitors the rental market, in the last decade rents have actually risen 22% but inflation has risen by 24% over the same period.
Letting Agent Today reports that in the East of England, real rents have risen 7.5% during the last 10 years. And in London, real rents are up a mere 0.5% since October 2008. However, inflation has outpaced rents in all other regions across Great Britain, resulting in negative real rental growth.
However, Aneisha Beveridge, Hamptons International’s head of research thinks this is only temporary, predicting that over the next few months inflation could begin to fade. Then rental growth will pick up pace.
If this is likely to be the case then ensuring your landlord is providing best value for money is paramount. Are your rental needs flexible or do you need to be in a particular area for work or schools? A good letting agent is always your first port of call to help you find the rental property that best meets your needs – and your finances.