Rental growth shows no sign of slackening, insists top agency

Rental growth is showing no sign of slackening with average rents up 8.3 per cent on the same time last year according to Hamptons, the lettings agency.  

This rate of growth places January 2023 as the sixth strongest month for annual rental growth since the Hamptons lettings index began in January 2014.

Rents rose strongly right across the country, however the Midlands and North of England both recorded double-digit increases (11.2 and 11.0 per cent respectively) with growth in these areas previously running in high single digits.  

Meanwhile the pace of growth in London eased slightly to 9.1 per cent as Inner London rents completed their catch up to pre-Covid levels, slowing the headline rate of growth across the capital as a whole.

For the seventh month running, rents achieved by one-bed homes grew faster than larger homes as the hangover from Covid continues to unwind. Both one and two-bed homes recorded faster annual growth in January 2023 than in any month since the lettings index began.

Back in November 2021, the average four-bed rent peaked at 126 per cent more than the average one-bed. But this gap has since closed on the back of the average rent for a one-bed rent rising 11.3 per cent over the last 12 months compared to 2.7 per cent for four-beds. 

This leaves the average four-bed home costing 108 per cent more than the average one-bed as of January 2023, still slightly above the long-term average of around 100 per cent.

Aneisha Beveridge, head of research at Hamptons, says: “While house price growth continues to slow, rents show few signs of deviating from their upward trajectory.  

“The number of homes coming onto the market remains well below pre-Covid levels, with landlords facing tough decisions as to whether the arithmetic still works if and when mortgage rates expire.  However, the downward drift in interest rates will bring some relief for those who need to re-mortgage in 2023.”