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With the cost of private rental soaring, new research shows that tenants are staying in a property longer to avoid a rent hike on moving. Rightmove’s Quarterly Rental Tracker indicates that only 21% of tenancies last a year or less, with 63% lasting more than two years. Almost one in five landlords reported an increase in the length of tenancies.
Rents rising at the fastest rate ever
Asking rents are rising at the fastest rate ever, with a year-on-year increase of 14% in London, taking the average monthly rent to £2,195. Outside the capital, rents have increased by 11% to an average of £1,088 per month. This is despite 63% of landlords who responded to Rightmove saying that they have not increased rent over the last year.
Many landlords develop a good relationship with a tenant over several years, and there’s evidence that many respect tenants who kept paying their rent through multiple lockdowns. On balance, there’s a lot to be said for keeping a good tenant for longer rather than risk losing them by cashing in on higher market rent in the short term.
The major factor in rising rental costs is demand. There are currently more than three times more prospective tenants than properties available to rent – the most competitive market ever. The lack of available stock results from tenants staying longer, together with demand from people who couldn’t move during the pandemic or who made temporary arrangements, moving in with family or friends.
The Office for National Statistics (ONS) defines a rental property as affordable if the cost of renting does not exceed 30% of the household’s income. These latest figures mean that almost one in three postcode areas in England and Wales are now considered unaffordable.
With the unrelenting increase in the cost of living, it’s not surprising that Rightmove’s research confirms the demand for ‘bills included’ rentals has risen by 36% in the last year. And the spectre of lockdown reveals itself as demand for homes with balconies and communal gardens jumped by 22%, the same as for properties allowing pets.