Rental Index Report. October Powered by MIAC. Statistics: UK. Key Feature: Growth in East Midlands, as Interest Rates Rise

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1 Rental Index Report October 2017 Powered by MIAC Statistics: UK Key Feature: Growth in East Midlands, as Interest Rates Rise Analysis: Rental Growth and Affordability in the UK Area Spotlight: Leicester, UK Rental Breakdown: Average Rents Across England 1

2 Statistics: October 2017 Average Rent in London vs Rest of UK Average Rental Price Rise Across the UK - Year on Year England 1, % 1,874 London 759 Rest of UK Tenants occupying properties in London are now spending an average of 1,874 on rent, whilst tenants outside the capital are paying 759 on average. Average Rent by No. of Beds London 1, % Scotland % ,449 1,920 2,677 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 1,449 on rent for 1-bedroom properties, 1,920 for 2-bedroom properties and 2,677 for 3-bedroom properties. Conversely, tenants occupying properties in the rest of the UK are paying an average of 599 on rent for 1-bedroom properties, 715 for 2-bedroom properties and 826 for 3-bedroom properties. Since October 2016, average rents in the UK have risen by 0.68% to 1,196. In England, rents were up by 0.60% to 1,227/ month; in London, rents fell by -0.80% to 1,874. In Northern Ireland, rental prices rose by 0.81% to 563/ month. Meanwhile, in Scotland, rents increased slightly to 733/ month, following an average annual growth of 1.81%; in Wales, the average rent rose by 1.49% to

3 Key Feature: Growth in East Midlands, as Interest Rates Rise East Midlands Tops Regional Growth Tables, As Interest Rates Rise The East Midlands has taken the rental growth leaderboard by storm this month, to become the region with the greatest rental change in the whole of the UK, since October Out of a list of the top 20 areas for annual rental growth, the East Midlands scored 6 places, with Leicester (3.23%) and Northamptonshire (3.19%) making the coveted top 10, in respective 8th and 9th place. Following them, Rutland (2.73%), Leicestershire (2.68%), Nottingham (2.56%) and East Midlands Regional (2.42%) snatched spots in close succession, suggesting that the region is becoming a more popular rental area. In fact, average growth in the East Midlands has not only increased by 0.08% since last month, but is currently almost 0.5% higher than average rental growth in the rest of England (outside London), rivalling the surge in rental growth recently seen in the East of England. The change comes as the Bank of England announced a 0.25% increase in the UK base interest rate to 0.5%, on Thursday 2nd November - the first rate-rise in a decade. Since August 2016, when the Monetary Policy Committee (MPC) made the decision to cut the base interest rate from 0.5% to 0.25%, residential property rents have risen by less than 1%, while house prices have grown by 5 times as much. Now, however, this reversion back to the original interest rate is expected to impact the rental market across the UK, as mortgage rates are also likely to grow. John Goodall, CEO and co-founder of Landbay said, A 0.25% uplift might seem small, but the message it would give to the markets, of monetary policy normalisation, could spook landlords, especially those embarking on long term tenancies. In and of itself, a quarter of a percent is not going to have a huge impact on rental prices overnight, but symbolically it has the power to galvanise landlords to price in many of the tax and regulatory changes that have been building up for some time now. East Midlands - Regional* 2.42% Nottingham 2.56% Leicestershire 2.68% Rutland 2.73% Leicester 3.23% *Map of East Midlands region Northamptonshire 3.19% 3

4 Analysis: Rental Growth and Affordability in the UK Average Rents in England (outside London), since October 2016 Darlington % County Durham % Hartlepool % Blackburn with Darwen % Kingston upon Hull % Redcar & Cleveland % Stoke on Trent % North East Lincolnshire % Oxfordshire 1, % Buckinghamshire 1, % Reading 1, % Windsor & Maidenhead 1, % Brighton & Hove 1, % Wokingham 1, % Surrey 1, % Hertfordshire 1, % Top 8 Most Expensive Areas Bottom 8 Least Expensive Areas 4

5 Analysis: Rental Growth and Affordability in the UK Top 8 Areas of Highest Rental Growth in England and Wales (excluding London) Average Rental price Rental change since Sep 2017 Rental price change since Jul 2016 Leicester Rutland % -0.08% 4.14% 3.61% Isle of Anglesey % 4.66% Peterborough % 4.43% Northamptonshire Isle of Anglesey Luton Thurrock % 0.26% 0.08% 0.20% 4.40% 4.66% 4.06% 4.33% 5

6 Analysis: Rental Growth and Affordability in the UK Bottom 8 Areas of Lowest Rental Growth in England and Wales Average Rental price Rental change since Sep 2017 Rental price change since Jul 2016 Cumbria County Durham % -0.01% 0.23% -0.27% Ceredigion % -0.60% Hartlepool % -0.78% Powys Wokingham Surrey Windsor & Maidenhead 510 1,034 1,437 1, % -0.14% -0.10% -0.33% 0.03% -0.66% -0.31% -1.33% 6

7 Area Spotlight: Leicester, UK Living in Leicester Buy-to-let properties in the city of Leicester, East Midlands, have experienced a significant rise in rental growth over the past month, so much so that the area leads the region as a hotspot for landlords looking to buy. Although the city takes 8th spot in this month s report of the 10 areas with the greatest annual percentage rental change, it zoomed past the East of England, which has dominated the spotlight in recent months, to take crowning glory as the region with the highest monthly rental growth at 0.60%. Rental properties in Leicester will cost tenants an average of 639/ month, with 1-bedroom prices coming in at an average of 491/ month, 2-bedroom at 630/ month and 3-bedroom at 715/ month. In comparison to the rest of the region, rental prices are only 17/ month more than the regional average and are almost 90/ month cheaper than prices in Northamptonshire, the most expensive area in the region. With High Speed 2 (HS2) looking to complete in 2026, it is possible that tenants are looking to get ahead of the rush to take advantage of the more convenient access and travel connections between London, the Midlands and East Midlands areas. However, the regeneration that is currently taking place in the city is perhaps enough of a draw on its own, to welcome new tenants to the bustling cosmopolitan hub. Over the last 5 years, the city has secured 25 million of funding to kick-start development in the Waterside area. This will see the building of 300 new homes, new office space, shops, green areas and canal paths. Furthermore, another larger 130-hectare site, Ashton Green, is looking forward to the development of up to 3,000 new homes, 10 hectares of office space, a commercial village centre and 50 hectares of green space, which would be perfect for new families looking for the best of country and city life. 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 East Surrey -0.35% 1, ,195 1,552 North East Tyne & Wear 0.51% North Cheshire 1.09% South Bath & North East Somerset 2.05% ,184 East of England Hertfordshire 1.08% 1, ,110 1,447 Midlands Warwickshire 1.71% Yorkshire & Humber York 1.18% London Kensington & Chelsea -2.30% 3,029 2,143 3,207 5,425 8

9 Rental Breakdown: Average Rents Across England Areas with the Lowest Rents in England, by Region Region Area Average % change (YoY) Average Rental price () Rental prices by beds () South East Isle of Wight 2.19% North East Hartlepool -0.88% North Blackburn with Darwen 0.37% South Torbay 1.71% East of England Peterborough 3.31% Midlands Stoke on Trent 2.54% Yorkshire & Humber Kingston upon Hull 070% London Bexley 1.22% 1, ,059 1,297 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