0:05 AM, 4th September 2024, About An hour ago
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Rents in the UK continued their upward trajectory in August, reaching a new high of £1,438 on average for new tenancies, Goodlord reveals.
However, the firm is warning that an affordability ceiling is close to being reached – and that could ‘unlock’ a new housing crunch chapter.
The rise marks the second consecutive month that rents have exceeded the £1,400 threshold.
The firm’s rental index also shows that while the average rent in August was slightly lower than the record-breaking £1,470 recorded in July, it’s still a big jump of nearly 7% compared to the same time last year.
Tenants in the South West saw the most substantial year-on-year rise in rents, with a 13% increase.
Goodlord’s chief executive, William Reeve, said: “Rental cost figures from the last two months closely mirror the trends we saw in 2023; a big surge upwards in July, with August figures dipping slightly but staying very high overall.
“Rents are now up 7% year-on-year, but salaries have only recorded a 1% uplift across the same time period: this is really putting the squeeze on tenants, with many likely to be facing affordability issues when they come to renew or take out a new lease.”
He adds: “With interest rates starting to drop and tenant incomes failing to keep pace with rents, there’s a strong argument that we may be nearing a sustainability ceiling on the cost of rent.
“If they escalate any further, prices will prove simply unaffordable for renters – unlocking a challenging new chapter in the housing crunch.”
The index also reveals that the East Midlands and North East saw significant year-on-year rent increases, exceeding 9%.
Conversely, the West Midlands and Greater London experienced more modest growth, with average rents rising by only 2-3%.
Nationally, rents dipped slightly in August, falling by 2% from July’s record high.
However, regional variations were apparent with the North East, North West and South West seeing reductions in average rents.
Void periods lengthened across most regions in August rising from 11 days in July to 15 days in August – slightly higher than the voids seen in August 2023.
Greater London was an exception, with void periods shortening slightly.
Tenant salaries also took a hit in August, dropping by 3.6% compared to the previous month.
While salaries have increased by 0.86% year-over-year, they have not kept pace with the 7% rise in rents, putting pressure on tenants.
