Copy of 2023-07-19T181329Z_1457431943_RC2701A3GEM1_RTRMADP_3_GLOBAL-HEDGEFUNDS-REGULATOR-ODEY-1689917000062
Properties available to rent in the second quarter were up by 7% on a year earlier, while tenant demand had risen by 3%. Image Credit: REUTERS

London: Average asking rents for new tenants in London shot up to a new record in the second quarter as rampant demand and higher mortgage rates prompted landlords to hike prices.

Tenants in the capital are now being asked to pay an average of 2,567 pounds ($3,310) a month - up 13.7 per cent from a year ago and by 28 per cent from the same time in 2019 before the pandemic. Outside London, asking rents are also at a fresh record of 1,231 pounds per month, up by a third from 2019 and 9.3 per cent from a year ago.

Read more

Soaring rents add to the cost-of-living pressures facing millions of households and could prove a tricky topic for both major political parties ahead of a general election expected next year. It’s left tenants scrambling to either pay for the swinging increases demanded by landlords or find a new place to live in a market where properties are in a short supply.

“The themes dominating the lettings market continue to be low supply and high demand,” said Allison Thompson, national lettings managing director of estate agent Leaders Romans Group.

Copy of 2023-07-19T230941Z_1512034553_RC2Y42A2OUMC_RTRMADP_3_BRITAIN-POLITICS-ELECTION-1689916996438
Prime Minister Rishi Sunak has been accused of worsening the shortage of properties on the market by scrapping housebuilding targets because of resistance from members of his own Conservative Party. The Labour opposition has ditched its pledge to bring in rent controls.

The Rightmove figures are significantly stronger than official data that looks at the entire stock of rented property. That measure from the Office for National Statistics showed rents paid by private tenants in the UK increased by 5.1 per cent in the year to June - the largest increase since official records began in 2016. London rents alone jumped by 5.3 per cent.

Rising interest rates are forcing some highly leveraged landlords to sell properties. Rightmove said 16 per cent of properties for sale were previously on the rental market, up from 13 per cent in January 2019. But Thompson said most landlords she has worked with are mortgage-free and there’s been an increase in the number of people looking to rent.

The supply squeeze has eased a little, Rightmove said. Properties available to rent in the second quarter were up by 7 per cent on a year earlier, while tenant demand had risen by 3 per cent.

But on average it takes just 17 days to find a tenant for an available property, according to Rightmove. That’s the quickest since last November.

The property portal’s figures indicate the pressure which the housing market is under from a supply shortage, rising interest rates and an increase in demand for rentals. Between 2015 and 2019, rental prices outside of London rose by just 8 per cent.

“Average asking rents for new tenants have risen at a rapid pace since the pandemic reflecting the significant increase in demand, which is driven by a combination of factors including changed housing needs such as some space to work from home,” said Rightmove’s director of property science Tim Bannister.