This information should not be interpreted as financial, tax or legal advice. Mortgage and loan rates are subject to change.
Categories: prs | property market
Market analysis from Hamptons lettings agency shows increasing rental costs mean that tenants have effectively lost a bedroom over the last two years.
Between July 2020 and July 2022, the average rental cost has risen by 16.2% - around £165 per month. This means that tenant’s budgets can’t cover the same size properties as they used to. Analysis from their research showed some striking comparisons:
The average cost of a studio apartment in 2022 is £817, which is the equivalent of a one-bed property in 2020.
Similarly, a one-bedroom would now cost around £929 per month, which was the price of a two-bedroom property, just two years ago.
Finally, an average two-bed is now around £1,068, which is the equivalent of a three-bed property, just 16 months ago.
This means that the budget for a property in 2022 would have got tenants a whole extra bedroom for the same price just 2 years ago.
Before the Covid-19 pandemic struck, the equivalent rental rise took six years to match that of the last 24 months. In a similar comparison, the average rental cost of a property today would have got the tenant two extra bedrooms eight years ago.
Hamptons’ view
Head of Research at Hamptons, Aneisha Beveridge says of this increase:
“After two years of record rental growth, tenants aren’t seeing their budgets stretch as far as they used to. And they are likely to be squeezed further still by a mix of investors leaving the market and the landlords left behind looking to pass on their higher mortgage costs.
“Tenants trying to move are increasingly facing a cost-cliff with market rents rising faster than what they’ve been paying for their current homes. Often this means they face compromising on what and where they rent next, with some having to trade down.”
Regional changes
While the above numbers are national average costs, different regions of the UK have seen varying impact.
The effect can be seen most in the South West of England, where rental costs have risen by 18.7%, or £169 per month in just over 16 months.
The next most affected area was Scotland, which saw this increase happen over 17 months, and the North West of England, which experienced it over 19 months. Comparatively, at the bottom of this scale, it took Welsh properties 30 months to catch up with their neighbouring areas.
