UK rents jumped to a record as landlords put fewer properties on the market and tenants were less inclined to move as a result of the pandemic.
The average rent of a newly let property was 8 per cent, or £68 per month, higher last month compared to a year ago, according to Hamptons Monthly Lettings Index.
The estate agent says this was the highest rise since its survey began in 2012.
However, average rents in Inner London plunged by 17.7 per cent year-on-year, the largest fall since the onset of the pandemic, as tenants sought rural locations.
The centre of the capital also saw fewer foreign tenants as a result of travel restrictions imposed by the health crisis following the first national lockdown in March.
Across Greater London, rents slipped by 0.2 per cent compared to last February, with the capital suffering “a double-dip in rental growth as rents fell again following five months of growth, said the report.
Although in Outer London, rents grew by 5.3 per cent annually, the sixth consecutive month of growth.
National rents were pushed higher because “300,000 fewer properties come onto the rental market since the onset of the pandemic”, almost a fifth less than during the previous 12 months, said the index.
Last month, the number of rental homes on the market fell by double-digit percentages in all ten regions of the UK apart from London compared with the same time last year.
The South West and Wales saw the largest falls, with 48 per cent fewer homes available to rent in February than a year ago.
By contrast, the capital saw its rental stock climb by 42 per cent over the same period.
The decline in the amount of rental stock means that just half of landlords across the country were able to secure a higher rents so far this year.
This is the highest proportion since 2016, with an average increase of £60 per month, the index reported.
In London, the figure was lower with just 37 per cent of landlords able to seek higher rents, the lowest proportion in the UK. By contrast, 62 per cent of landlords in the South West were able to achieve lift rents on their properties.
Hamptons added: “The urban-rural divide which first emerged at the start of the pandemic has continued to deepen. There were 16 per cent more homes available to rent in cities across Great Britain in February 2021 than at the same time last year, while towns and country locations recorded falls of 28 per cent and 52 per cent respectively.”
The number of tenants looking for countryside locations remained flat over the same period, while falling 10 per cent in cities, added Hamptons.
Also, since the onset of the pandemic landlords have been largely prevented by emergency legislation from evicting tenants, which has held down rental turnover.
Hamptons head of research Aneisha Beveridge says: “This year we’ve seen a sharp decline in the number of rental homes coming onto the market. Would-be tenants are now faced with significantly less choice, which in turn is pushing up rents.”
Beveridge adds: “Rental stock levels have also been hit with the onset of the pandemic causing investors to hold back. This has been compounded by emergency legislation which saw landlords having to extend a tenant’s notice period to a minimum of six months, reducing turnover further. At the same time, many renters who were looking to buy had to put their plans on ice and continue renting, as banks sought larger deposits for house purchases.”
However, Hamptons says recent moves in the market may see a growth in rental stock.
The initial stamp duty deadline of the end of March which gave relief on properties under £500,000, spurred a number of landlords into the market.
Last week’s Budget saw the chancellor relax this deadline until the end of June, before returning to the standard cut-off rate of £125,000 from 1 October.
The government-backed mortgage guarantee scheme, also announced in the Budget, aims to encourage 95 per cent mortgages, which were a feature of the market before the pandemic hit. This will allow renters saving for a deposit to buy their own homes earlier.
Hampton’s Beveridge says: “Over the last five months, and in an effort to beat the original stamp duty deadline of the end of March, landlord purchases started to rise, which will add to stock levels when these homes complete.
She adds: “Meanwhile the government announced a new mortgage guarantee scheme in the Budget which is aimed at helping would-be buyers with small deposits, many of whom are currently renting. Both factors, alongside the ending of the eviction ban in April, mean rental stock levels may have bottomed out.”
