Rents skyrocket outside London as demand shifts to affordable regions

Rents outside of London are skyrocketing as demand soars in regions that have traditionally been more affordable, says  agency.

The latest HomeLet rental index reveals while Greater London remains the most expensive region, with an average rent of £2,148 in August 2024, its annual growth has slowed to just 0.1%.

However, regions like the East of England and the North East have experienced significant rent increases, surging by 9.4% and 9.2% year-on-year.

Things will get worse before they get better

Andy Halstead, CEO of HomeLet and Let Alliance, said: “The rental market continues to be challenging for all stakeholders. The next six months or so will be interesting, and I am not optimistic.

“Tenant affordability will be the challenge for 2025; every indicator suggests, and, to quote our new Prime Minister, “things will get worse before they get better” Our data, indicates that rent arrears will be the biggest risk to landlords.

“Increases in taxation, the removal of winter fuel payments, rising fuel duties, essential services, and the overall cost of living are all putting tenants under growing financial strain. With limited housing supply driving rents higher, it’s more crucial than ever for agents and landlords to safeguard their revenue streams.”

Growing demand outside of London

The average rent in the East of England has risen to £1,302, up from £1,190 last year. HomeLet suggests that this increase is driven by growing demand outside of London, as more renters look for homes in areas with good transport links and expanding job markets.

Rents in the North of England, traditionally one of the UK’s most affordable regions, have seen a sharp increase, rising from £665 in August 2023 to £715 in August 2024.

Wales and the South East saw similar year-on-year growth rates, both rising by 7.5% annually. The West Midlands and North West regions also reported strong annual growth of 8.3% and 8.1%, respectively, while Scotland saw more modest increases of 3.4%.

Income spent on rent rises

The Household Income to Rental Ratio — the share of income households spend on rent — has risen significantly in the past decade.

The ratio in the UK (excluding London) has jumped from 26.8% in 2014 to 32.6% in 2024.

Despite being one of the most expensive regions, London’s ratio has remained relatively stable, increasing from 27.6% in 2014 to 32.9% in 2024.

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