Higher wages and lower deposits take sting out of renting, say The DPS
Em Morley - January 23, 2020
Despite increased rent prices, new research shows the proportion of income spent by tenants on rent decreased between 2016 and 2019.
As part of The Deposit Protection Service’s (The DPS) latest Rent Index, rent levels were compared across the country with average salaries. The results show that the average proportion of wages spent on rent fell from 32.64% in 2016 to 30.64% in 2019.
Various factors have been noted by The DPS that helped to improve the affordability of renting during this period. The deposit cap introduced in June 2019 is one example, leading to a £77 decrease in average tenancy deposits. There was also a 2.69% increase in average salary.
The DPS Rent Index also revealed that average rents reached a peak of £777 during the third quarter of 2019 (Q3 2019). It then decreased marginally by £4 to £773 during the following quarter.
Matt Trevett, Managing Director of The DPS, said: “Although rents have risen over the past decade, other changes since 2016 have helped ensure renting has become on average more affordable.
“Predictions that rents would rise in response to the introduction of the tenant fees ban and deposit cap do not seem to have materialised, with many landlords seemingly declining to increase rents since last summer.”
Paul Fryers, Managing Director at specialist buy-to-let mortgage provider Zephyr Homeloans, said: “Although the longer-term recovery in rental levels is likely owing to broader economic factors, changes to rental figures are also more likely at moments where property changes hands.
“Over the last couple of years, professional landlords have become a larger proportion of the buy-to-let market as more and more smaller or ‘accidental’ landlords sell up, partly as a result of increasing costs.”
The biggest increase was recorded in Northern Ireland for average monthly rents (3.01%), from £532 to £548 during Q4 2019.
Yorkshire and The Humber saw the biggest decrease in average monthly rent prices, from £551 to £524 (4.90%).
Unsurprisingly, London continues to be the most expensive rental region in the UK. The average monthly rents in the capital stood at £1,345 in Q4 2019. This is over two and a half times the amount paid in the North East, which is the UK’s cheapest region at an average of £518.
The report shows that if we exclude London, the average monthly rent during the final quarter of 2019 was £672.
Detached properties saw the largest increase at 0.81%, going from £990 to £998 in Q4.
Terraced houses saw a decline in monthly rents during Q4. They fell from 0.55%, from £732 to £728.