Current Rental Market Performance

publication date: Jan 9, 2012
 | 
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
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Current Rental Market Performance


Average Rental Rates


There are three main monthly rental indices, one quarterly and several indices and research papers which measure specific markets, such as the student market and room rents, which help to explain the current rental market.

Rental Index 2011

Unlike the property price indices whose ‘average property price' varies by 38% (from around £160,000 to £220,000), the rental indices vary by around 10%. This can be mostly explained by regional factors as Belvoir has more offices around the UK than London based offices, whereas the FindaProperty Index covers quite a bit of London.

What is helpful with the rental indices is that although they measure the market differently, some measuring actual rents achieved and others advertised rents, in the current market the two numbers are typically the same. Any good letting agent will know it is fool hardy to ‘over price' a rental property as it can lead to lengthy voids which cost the landlord dearly. 

As the figures above show, there has been a steady increase in rents this year rather than the ‘rapid rise' reported by much of the media. Normally, we see average rents fall towards Christmas as landlords are keen to rent properties out rather than leave them empty over the holiday season.

The average length of time for a tenant to rent a property is nearly 20 months and as yet not all of the indices go back this far. Of the two which do, Belvoir and FindaProperty they both show that in January 2010, almost two year's ago, rents are pretty much on a par. From a tenant's perspective, unless you are living in high demand and low supply areas such as London and parts of the South East, on average you are likely to be paying similar rents.

From a landlord's perspective this isn't great news as ideally you would want rents to be somewhat higher to take into account two years of inflation running at around 5%. So for an average of £700 two years ago, you would hope to be charging around £770 rather than maintaining rental levels. This may however explain why several of the landlords' surveys have indicated they are achieving 2-4% increases in existing rents.


ALSO READ Rental Market Update 2012 and Rental Market Outlook for 2012

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