Asking rents outside London rose by 2.7% in the second quarter (Q2) of 2015, compared to the capital’s 2% growth, revealed Rightmove.
The South East achieved the highest increase of 4.1%, and rents are up in all regions except Wales (-4.1%) and the North East (-0.5%).
Rightmove data found that in the last year, tenant demand for private rental property has reached a record high around the country, with a 52% rise in email enquiries. The East of England has experienced the greatest increase of 64%.
Grays and Southend-on-Sea in Essex are tenant demand hotspots.
Tenants seeking better value outside the capital have driven asking rents higher in the South East and the South West, where rents have risen by 3% in Q2.
Head of Lettings at Rightmove, Sam Mitchell, says: “Rents have grown this quarter in nearly all regions of England and Wales, fuelled by demand outstripping supply in many of the sought-after areas, especially in the East of England and the more affordable areas of London.
“The smaller rise in the capital is likely to do with the fact that costs in many areas are nearing many people’s affordability ceiling.”
The average asking rent in London, £2,052 per month, is now almost double that in the second most expensive region, the South East, at £1,078. It is also around four times more expensive than the cheapest region, the North East, at £534.
Rightmove reveals that two of the highest growth areas are Bushey, Hertfordshire, which has seen prices rise by 21% in the past year and Stevenage at 13%. Deal in Kent has also witnessed prices rising by 13% over the last 12 months.
Within the capital, rental prices have grown the most in Battersea, fuelled by the redevelopment of the area, up by 14% in the past year. North West London areas, Wembley and Brondesbury, follow at 11%.
London’s demand hotspots all have average asking rents much lower than the capital’s average. The top three are Bexleyheath at £1,048, Sidcup at £1,073 and Carshalton at £1,095.
Mitchell continues: “Tenants staying longer in a property is contributing to the lack of supply in some areas and agents tell us that in the most in-demand areas, good properties on at the right price are being snapped up within a few days.
“In the fastest moving areas, prospective tenants are sending email enquiries to agents within a few minutes of the property being marketed on Rightmove, showing that people need to get in quick and have all of their references ready to have the chance of getting the property they want.
“The substantial rent rise this quarter will offer some encouragement for the buy-to-let sector, following the summer Budget’s announcement of a clampdown on tax relief.”1
Head of London Lettings at Strutt & Parker, Zoe Rose, expands: “Rents are rising at a more subdued rate in the capital than the rest of the country for a number of reasons. In prime central London, there is more stock because tenants are very much in the driving seat.
“As people are also being accustomed to renting for longer periods, a lot of tenants are signing up for two or three years from the outset with rental increases of 3-5% per year written into their contracts.
“This keeps rental rises at a more sensible level, as landlords are being asked to commit to longer term tenancies.
“Over the past few years, it’s been an intense market in the centre of London, with rents in zone 1 and 2 gently creeping up, prompting tenants to look further afield than traditional areas like Clapham, Fulham and Battersea, to get good value.”1