2023 Proves to be Best November for Rental Growth Since Records Began
Last month, rents in Britain registered the highest increase of any November in at least a decade. The yearly change was recorded as 10.2%, according to estate agent Hamptons. This is the highest November increase since records began in 2014.
Due to this escalation, the national average rent for a newly let home in Great Britain has now reached £1348. This 10.2% climb translates as a £125 increase on average compared to November 2022.
Throughout 2023, there have been a slew of double-digit year-on-year increases when it comes to average rental costs. While double-digit growth wasn’t observed in the British rental market until May 2022, they seem to have become the norm, with seven double-digit surges recorded in the last twelve months. This includes a record peak of 12% in August.
A record amount of rent was also paid by tenants this year, hitting £85 billion. In 2010, this number was closer to £40 billion, meaning the figure has doubled in just 13 years.
This continuing rapid rise in rental growth in the UK has added to the attractiveness of buy-to-let, suggesting it is one of the best things to invest in right now for long term.
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Which Areas Had the Highest Rent Increases?
Inner London, which already has the highest average rent, has displayed the biggest year-on-year percentage change – a hefty 13.2% – hitting £3174 per calendar month. This may explain why London buy-to-let is still a popular investment choice despite the rising price of buy-to-let properties in London.
But rents across the country have also grown at a brisk pace. Even excluding London, the average increase for Great Britain was 9.3%. Northern areas have registered percentage increases in line with or exceeding this figure, while regions in the South and Wales have had slower growth.
The smallest increase was observed in the South West, where the average for a newly rented home grew by 5.1% to reach £1162 per month.
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Why Are Rents Rising at Such a Fast Pace?
According to Aneisha Beveridge, the head of research at Hamptons, rental growth has hit record-breaking heights in 2023, contributing to this sharp hike. The supply-demand imbalance has played a big part in rent increases, as potential tenants are now competing to rent available homes.
There has been a 25% rise in renters over the last 13 years, as younger generations have started renting for longer than previous generations.
The chronic undersupply of rental properties means that it’s likely that rents will continue to rise for the foreseeable future.
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More Millennials Will be Renting Indefinitely
In particular, this state of affairs is observed in the millennial generation, who rent for longer rather than buy property. Higher interest rates and high house prices keep more people off the property ladder, and many have decided to start families and rent larger, more expensive homes, increasing the rent they pay.
Hamptons predicts that more millennials will be renting their residence indefinitely, further shifting the trend in the UK towards renting rather than buying.
To find out more about property investing, take a look at our guide. Or learn more about the buy-to-let scene in specific UK regions with our area guides: