Would-be buyers push rents in commuter belt up faster than central London
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Rents soared in the South East of England during 2015 as people who would usually move out of the capital to buy are increasingly moving into the commuter belt in search of more affordable rent.
Increased demand and a consistently low supply of rental property has pushed prices in Greater London up 5.1 per cent and in the South East 4.5 per cent in the year to August 2015, according to the Countrywide Residential Lettings index, while rent in central London has decreased 1.4 per cent – the only region to see a fall in prices.
Johnny Morris, research director, Countrywide plc, said: “Rental price growth in the South of England, outside of London is being fuelled by an increase in the number of Londoners leaving the capital, looking for more affordable markets in the commuter belt.
“With the number of over 30s and families renting steadily increasing, more renters are now making life stage moves out of the capital, which have in the past, mostly been associated with home owners.”
Increased demand, caused by rising house prices pushing potential buyers into the rental market has been coupled with a lack of supply – the total number of homes advertised to rent fell 8 per cent in August compared to the same month in 2014.
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This has seen nearly half (45 per cent) of tenants who renewed tenancies in August accept rent increases, the highest level since the index began. The average rent rise was 2.5 per cent.
Meanwhile the average increase for a newly let property is 3.8 per cent since August 2015, pushing average rents to £946 pcm.
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The report points out that this is well above CPI inflation, which slipped back to zero this month.
Mr Morris said: “Falling numbers of homes available to rent and increasing demand from tenants have been the defining features of rental market so far in 2015.
“Competition for rented homes has intensified and led to accelerating rent growth. Nine tenants are now registered for every home available to rent, up from 7.5 in August last year.
“With pressure on rents and increased competition for homes on the market, the proportion of renewing tenancies seeing an increase in rent has grown.
“Faced with the choice of staying put or moving in a market with more competition and increasing rents, more tenants are choosing to accept a smaller increase in rent to extend their existing tenancy.”