Rental Index Report. March Powered by MIAC. Statistics: March Key Feature: The Regional Cost of Renting

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1 Rental Index Report March 2018 Powered by MIAC Statistics: March 2018 Key Feature: The Regional Cost of Renting Analysis: UK Rents vs Tenant Affordability Area Spotlight: North- Rental Breakdown: Average Rents Across England 1

2 Statistics: March 2018 Average Rent in London vs Rest of UK Average Rental Price Rise Across the UK - Year on Year England 1, % 1,879 London 761 Rest of UK Tenants pay an average of 1,879 for properties in London and 761 for properties in the rest of the UK Average Rent by No. of Beds London 1, % Scotland % ,455 1,923 2,680 Rental prices according to no. of beds Rental prices according to no. of beds London Rest of UK Wales % Northern Ireland % Tenants occupying properties in London are now spending an average of 1,455 on rent for 1-bedroom properties, 1,923 for 2-bedroom properties and 2,680 for 3-bedroom properties. Conversely, tenants occupying properties in the rest of the UK are paying an average of 601 on rent for 1-bedroom properties, 717 for 2-bedroom properties and 829 for 3-bedroom properties. Since March 2017, average rents in the UK have risen by 0.69% to 1,200. In England, rents were up by 0.64% to 1,231/ month; in London, rents fell by -0.28% to 1,879. In Northern Ireland, rental prices rose by 1.35% to 568/ month. Meanwhile, in Scotland, rents rose slightly to 732/ month, following an average annual growth of 1.15%; in Wales, the average rent rose by 1.55% to

3 Key Feature: The Regional Cost of Renting Rent Rise Bites a Bigger Chunk Out of Tenant Take-Home Pay Rental payments in the UK now account for over half (52%) of the average disposable income of 1,471 for people living and working outside the capital, according to the latest Landbay Rental Index, powered by MIAC. The average rent paid for a residential property in the UK outside London hit 761 in March, taking annual growth to 1.21%. Those living in the capital face an even tighter squeeze. Average rents in London remain more than double the average for the rest of the country at 1,879, despite rental growth only recently returning to positive territory. Average disposable income in London is 2,108 so for single-earner households that means the average monthly rent for a property eats 89% of their take-home pay. Accordingly, most London households must rely on multiple or high-income earners. If London workers are willing to move further afield to save money, they can expect to spend a far lower percentage of their disposable income on rent, closer to the national average. Average rents in the South now stand at 1,053. This is 58% of the average disposable income of 1,817 of those living in the region, whilst another option is England, where average rents are 55% of take-home pay. On the other end of the spectrum, those working and living in North see the lowest percentage of their salary going towards rent, where just 41% of their average disposable income of 1,350 is handed over to the landlord each month. John Goodall, CEO and founder of Landbay said: Rents have continued to rise over the last five years, increasing by 9% across the UK since March 2013 and by 7% in London, with monthly payments remaining a burden on those struggling to save. Tenants saving for a house face a triple-challenge with more and more of their income spent on rent, partnered with trying to catch-up with the pace of house price inflation and record-low interest rates limiting their ability to save money. There has been much speculation about the long-term future of the buy-to-let sector from an investment perspective, however, demand remains strong as brokers would attest. Not a day goes by when there isn t more news about the supply-demand mismatch in the UK housing sector and until this is resolved, tenants will continue to rely on the private rented sector to support them. With the right property and the right location, there are attractive yields to be had, and consistent rental demand will drive returns in the long-term. 1 ONS Regional gross disposable household income (GDHI) 3

4 Analysis: UK Rents vs Tenant Affordability Regional Percentage Rental of Average Growth Tenant Across Take-Home England Pay Spent on Rent Across UK Monthly gross disposable income per head () % disposable income spent on rent Source: ONS data North 1,350 41% North 1,410 44% Yorkshire & Humber 1,356 43% Midlands 1,411 44% Midlands 1,380 50% of England 1,650 55% South 1,594 47% London 2,108 89% South 1,817 58% Average Rents Across England 619 North 1,053 South 553 North 577 Yorkshire & Humber 1,879 London 686 Midlands 627 Midlands 749 South 910 of England 4

5 Analysis: UK Rents vs Tenant Affordability Regional Average Rental Growth Across London England Borough Average rent () Average growth Year on Year (%) Barking & Dagenham Barnet Bexley Brent Bromley Camden City of London Croydon 1, Ealing Enfield Greenwich Hackney Hammersmith & Fulham Haringey Harrow Havering

6 Analysis: UK Rents vs Tenant Affordability Regional Rental Growth Across England Borough Average rent () Average growth Year on Year (%) Hounslow Islington Kensington & Chelsea Kingston upon Thames Lambeth Lewisham Merton Newham Redbridge Richmond upon Thames Southwark Sutton Tower Hamlets Waltham Forest Wandsworth minster Hillingdon

7 Area Spotlight: North- The UK s Smallest Lease Feast With average rents of 553/ month, the North- boasts some of the lowest average rental prices across England. It s no wonder that certain parts of the region, such as Tyne & Wear and Middlesbrough are experiencing a rise in popularity, as tenants look for a lease that bites a smaller chunk out of their monthly earnings. In the North-, average monthly tenant income is 1,350. This is almost 800 less than tenants living in London. However, the average percentage of take-home pay that is consumed by rental payments is 41%. This is the lowest percentage of all regions in England and less than half that of London (89%). One of key reasons for this difference is greater desirability to rent in London, over other areas of the country. As the UK capital, London is especially attractive for the younger generations, keen to develop their careers. However, as demand continues to exceed supply, so rental prices remain high to steal a much bigger chunk of tenant take-home pay, despite their, on average, higher salaries. For 1-bedroom properties in the North-, tenants can expect to pay an average of 448/ month. For 2-bedroom properties, this increases to 504/month, while for 3-bed properties it rises to 595/month. Compared to average rents in the UK capital, rental prices are almost 3.5 times cheaper in the North-. 7

8 Rental Breakdown: Average Rents Across England Areas with the Highest Rents England, by County Region Area Average % change (YoY) Average Rental price () Rental prices by beds () South Surrey -0.09% 1, ,200 1,548 North Tyne & Wear 0.75% North Cheshire 0.73% South Bath and North Somerset 2.60% ,202 of England Hertfordshire 0.79% 1, ,116 1,442 Midlands Northamptonshire 2.56% Midlands Warwickshire 1.68% Yorkshire & Humber York 1.02% London Kensington & Chelsea -1.08% 3,035 2,123 3,233 5,444 8

9 Rental Breakdown: Average Rents Across England Areas with the Lowest Rents in England, by County Region Area Average % change (YoY) Average Rental price () Rental prices by beds () South Isle of Wight 1.79% North Hartlepool -0.68% North Blackburn with Darwen 0.78% South Torbay 1.78% of England Peterborough 3.04% Midlands Derby 1.93% Midlands Stoke on Trent 2.22% Yorkshire & Humber Kingston upon Hull 0.77% London Bexley 1.48% 1, ,310 9

10 About Rent Check & the Landbay Rental Index Rent Check is an online tool that allows tenants and landlords to validate movements in their own rents against others in their area in a fast and user-friendly way. The postcode search widget harnesses sophisticated UK wide data from Landbay s monthly Rental Index, powered by MIAC. The index maps annual and monthly trends in advertised and actual rents, both geographically and by bedroom number, providing unique and sensitive insight into market movements and social mobility. To validate your rent change by area and number of bedrooms, please visit rentcheck.landbay.co.uk The Landbay Rental Index The Landbay Rental Index includes unique granular level detail, looking at local trends to the county and London Borough level, including further segmentations by number of bedrooms. The credibility of any index is highly dependent on the breadth and depth of underlying data used, which is why this rental index utilises data from Zoopla, the British property website. Approximately 100,000 properties are analysed each month to form the index. The rental values are mix adjusted by property type, number of beds and geography to ensure that any change in the composition of the data over time does not skew the results. The changes in rents are calculated based on matched samples of homogenous or identical data points over time. MIAC employs sophisticated smoothing techniques and interpolation to filter noise and optimise the signal from the data. Landbay and MIAC do not make any declaration regarding the accuracy or completeness of the Rental Index; collectively reserving the right to adjust the methodology and to edit or withdraw any reports or data. Landbay and MIAC shall not be liable for any decisions made or action taken in response to the published data. 10