Countrywide says average rents across the UK are now at their highest-ever levels, some 12 per cent above their pre-recession peak.
This is despite the fact that in January, compared to the same month last year, average rents in the UK had risen only a modest 1.2 per cent to £906 a month.
Unsurprisingly, London has seen the largest growth in rents anywhere in the country since 2007 with rents 34 per cent higher than their pre-recession record. Between 2007 and today the average Londoner has seen rent rise from £966 to £1,295 a month.
However, Countrywide’s research director Johnny Morris says that despite the popular narrative of ever rising rents, over the past nine years the majority of the country has experienced rents growing steadily in line with incomes.
He says average income has increased by 12 per cent since 2007 according to the Office for National Statistics - directly comparable to the 12 per cent increase in average rents.
“Nationally rents in January rose at the slowest rate since 2012 as some of the upward pressure on prices subsided and affordability limited further rises. Across most of London and the south east theis slowdown in rental growth is the first since 2010, where rents have been growing for the past six years” says Morris.
But he insists the rental market adheres to a classic north/south divide.
In the north west, north east and Wales the average tenant is still paying less than they were in 2007 by £12 a month. Even across the UK as a whole, one in five tenants is still paying less rent than they were in 2007.
In London rents have grown well beyond incomes. Incomes in the capital have only increased by 10 per cent since 2007 whilst rents have grown by 34 per cent, fuelled by a lack of supply and high demand.
In 2007 the average monthly rent for a home in the UK peaked at £809 before the recession hit. Between the end of 2007 and 2008 the average cost of renting a newly let home fell 11 per cent, equating to a fall in the average monthly rent of £87. This brought the cost of renting the average home down to £720.
It wasn’t until the start of 2010 that rents started rising again.
“The most sustainable way of creating a more affordable rental market in London and the south is by building more homes of every tenure” says Morris.
“Unlike in the US where institutional investors build homes to rent, in the UK the sector is dominated by small landlords meaning the link between new homes getting built and the rental market isn’t nearly as close as it should be.”