The difference in cost between renting a home in the North than the South is almost twice as much as it was in 2008, according to new research.
Data from the January 2014 HomeLet Rental Index shows it is currently 69% more expensive to rent a home in the southern regions of Greater London, the South East and South West, than in regions around the rest of the UK. In January 2008 this difference was just 37%.
With regards to the overall UK average rental amount, HomeLet’s new data shows this figure decreased by 1.7% during January to £800 per month. However, despite this monthly drop, rental amounts are still an average of 2.4% higher than the same time last year.
Gary Abraham, HomeLet’s Sales and Marketing Director, said: “With UK home sales at the highest for six years (according to recent figures released by RICs) we might expect tenant demand for property in the private rented sector to drop in 2014, as they potentially begin moving in to owner occupied accommodation.
“Our latest data certainly shows that the rate at which rental values are increasing has slowed down following the rapid growth we saw immediately after the 2008 housing crisis. However, whilst more people are buying, a reported increase in house prices means that buying remains unaffordable for many, particularly in the capital, and some would-be-buyers may worry about the prospect of factors like negative equity or large deposits.
“A lack of affordable housing stock in the south could be one of the drivers for the growing divide we’re seeing between rental values in the North and the South. Our data shows that the difference in cost between renting a home in the South compared to the North has increased for the sixth consecutive year.
“Whilst the owner occupied market might be stabilising, the private rented sector is becoming a much longer term housing solution for many. We’re seeing a combination of increased average tenant ages, increased income and previous tenancy length.
“This month’s HomeLet Rental Index data shows the average age of a tenant increased during the past 12 months to reach 34. We also saw average income of tenants across the UK increased by 5% over the same period to £28,500 per annum and previous tenancy lengths increase by 6% to reach an average of 21.4 months.
“As ever the demand that drives rental values in more popular areas is localised, with some regions seeing much more dramatic fluctuations in amounts than others. Specific property types in certain areas, such a larger family homes that come on the market less frequently, could be a contributing factor to this.
“I believe the private rented sector will continue to expand in 2014, but frequency that tenants move will decrease. And whilst rents will continue to rise marginally year-on-year we won’t see the dramatic increases in rental values that we’ve seen in the past few years.”
You can read a summary of the January 2014 HomeLet Rental Index on the Rental Index pages of our website.
Regional breakdown of average UK rents (source: January 2014 HomeLet Rental Index)