Rents reach record levels – London Wallet

Rents in the final quarter of 2022 reached an all-time high yet again as housing supply continues to dwindle, with little sign of things changing anytime soon.

The latest data from SpareRoom reveals UK rents increased by 13%, comparing Q4 2022 with Q4 2021. As of December 2022, the average UK room rent was £731 per calendar month (pcm).

The average cost to rent a room in Greater London went over £900pcm for the first time ever in September 2022 and has continued to increase, with the average rent in December at £949pcm.

Comparing Q4 2022 with Q4 2021 the capital saw the biggest increase in room rents across all UK regions. Scotland was the only UK region to experience a decrease (-6%) in average rents, however this is due to rents being inflated in Q4 2021 in the Glasgow area due to the Cop26 summit.

Demand for properties was at an all-time high in late summer/early autumn, while supply was at a nine-year low. To put this into context – there were 245,351 renters searching and only 34,085 rooms available. Although demand dropped in the lead up to Christmas, the number of rooms also decreased over 2022. This, combined with cost-of-living increases, mean things are incredibly tough for renters right now.

One factor in the drop in supply is landlords’ continuing loss of confidence in the rental market. A recent SpareRoom poll suggests that the next 12-months will see a further decline in supply, with 41% of landlords/agents either looking to reduce their portfolio in 2023 or exit the rental market altogether. Over half – 57% – of those surveyed admitted to not having confidence in the rental market right now, landlord confidence has decreased over the last 18 months.

Matt Hutchinson, director at SpareRoom, said: “Although demand has eased since the record peaks we saw in August and September, the combined effect of low supply and the cost-of-living crisis means rents have continued to rise. The last 12-months has seen rents across the UK hit record highs and, unless new supply comes into market over the coming months, it’s hard to see those rents come down meaningfully in 2023.

“High rents not only make it difficult for tenants who need to move now, it also means that many stay put to avoid paying more rent. Unless people are able to move freely, the impact on the economy could be significant. Work is the key reason people move, but if a potential pay rise is wiped out by having to pay more rent, lots of people will simply stay where they are.”