Existing tenants are staying longer in their rental properties, while new tenants are hunting ‘all bills included’ deals, as they face record rents and rising living costs, says Rightmove.
New rents are rising at the fastest pace ever recorded, up 11% year-on-year to a record £1,088 per calendar month outside London, according to the property website’s Quarterly Rental Tracker. In the capital rents have jumped by over 14% to £2,195 per calendar month.
The study says: “Tenants are staying longer in one rental property to avoid being faced with record rents when moving to a new place.”
Currently 63% of tenancies last over two years, with just 21% staying for a year or less. The report adds that 18% of landlords have seen an increase in the average length of time a tenant stays in their property.
Electricity and gas bills for a typical household jumped by £693 a year last month, a 54 per cent increase, after regulator Ofgem raised the price caps energy firms are subject to earlier this month, with further rises expected in October.
Inflation hit 7% in April, a 30-year high. The Bank of England has warned that inflation will top 10% by the end of the year, something not seen since 1982.
The Rightmove survey adds: “As the cost of living increases, more tenants are focused on finding a home with all bills included. Demand for all bills included jumped by 36% versus last year, outpacing the growth in demand for all other features.”
Homes with balconies, communal gardens, properties allowing pets and those offering zero deposits all came equal second in terms of tenants looking homes with features, with enquiries jumping by 22% on a year ago.
The tracker says: “There are also more than triple the number of tenants enquiring as there are rental properties available, making it the most competitive ever rental market.
“The lack of available stock is a combination of more tenants staying put in longer tenancies, coupled with high demand from people who didn’t move during the pandemic, or who moved in with friends or family temporarily.”
The report adds that “many landlords have recognised the challenges of rising household bills”, with 63% choosing not to put up rents over the past year, while 37% have increased rents.
It says: “Some agents in bigger cities report that tenants who were able to move into a property for much lower than the average rent for an area during the pandemic have seen rents increase back up to market value again now that demand has increased.”
Rightmove director of property data Tim Bannister says: “A shortage of rental homes and strong demand for the properties available has led to a greater number of tenants choosing to renew their leases and stay put, rather than re-enter a competitive rental market.
“People who had been waiting to see what happened last year are now being faced with record rents and so are seeking out properties where they can have more certainty over their outgoings, with all bills included becoming increasingly sought after.
“Landlords may have been tempted to put their rents up given the high demand from new tenants, but many understand the affordability challenges of rising rents and bills, as our study shows that the majority are charging their tenants the same as a year ago.
“Many landlords build up a relationship with their tenants over a number of years, and they will want to keep a good tenant for longer if they can rather than cash in on a rent rise in the short term.”
Chestertons head of lettings Richard Davies adds: “The market is showing a definite trend of tenants extending their rental agreement. Year-to-date to the end of April, we have seen an 11% increase in the number of tenants renewing their contract compared to the same period last year.
“The reasons vary, with some tenants being worried about the cost of living and wider economic uncertainty which prevents them from taking on an costly move. Others have realised that demand has pushed rents up considerably, which makes staying put financially more viable, especially where they have paid their rent on time and are taking care of the property.
“Another factor are interest rates. Some tenants may have seen their rental situation as a temporary solution to save up for their property purchase, however, the recent boost in interest rates has resulted in house hunters putting their purchase on hold for now.”
