Hot Market: many tenants pay above asking rents to secure properties

Average UK rents have increased for the sixth consecutive quarter - but some tenants are paying above the going rate to secure a property.

The Deposit Protection Service says that average rents now stand at £849 a month - that’s a £15 increase on the figure at the end of 2021 and a £49 of 6.13 per cent increase the picture a year ago.

According to DPS’s quarterly rent index, London rents have risen the most in value - up 2.46 per cent in a quarter and 6.79 per cent over 12 months ago. 

Flats have seen the largest quarterly rise in rents, up 1.89 per cent. 

A DPS survey also highlights how around 15 per cent of tenants paid above asking rents to secure their property.

DPS managing director Matt Trevett adds: “Consistent quarterly rent rises – coupled with survey results that suggest that a proportion of tenants are overpaying to secure a property – underline the current intense demand for, and tight supply of, rental homes in the UK.

“Rents in London are also rebounding strongly, with average rents for flats in the capital increasing by £111 or just under nine per cent during the past twelve months – more than three times the falls seen during 2020, when tenants perhaps sought out more spacious homes outside of the Capital.

 “Accelerating rents for flats could signal the beginning of the end of the pandemic trend of renters leaving cities.”

Paul Fryers, managing director of Zephyr Homeloans - a specialist buy-to-let mortgage provider under the same Computershare ownership as DPS - adds: “The squeeze on rental stock is also impacting landlords, who are increasingly looking further afield to secure a suitable rental property.

“Recently we’ve seen landlords looking to Northern cities such as Manchester and Liverpool, which are the subject of recent Government investment and where more landlords believe they may find healthier yields.”

 Between Q1 2021 and Q1 2022, all UK regions registered an increase in average rents, with 10 out of 12 experiencing increases of more than 4.0 per cent. The largest percentage increase during the past 12 months took place in the West Midlands, where rents rose 7.57 peer cent. 

Rents during Q1 2022 decreased marginally in the South West by just 0.12 per cent; rents in Yorkshire fell 0.34 per cent.