Landbay Rental Index. Powered by MIAC. UK Nationwide

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1 Landbay Rental Index Powered by MIAC UK Nationwide Results for September 2015

2 Landbay Rental Index, powered by MIAC September 2015: UK Key Findings Rent rises for one bedroom flats accelerate sharply, driven by demand from first-jobbers Annual rate of growth in UK for one bedroom properties rises to 3.9% in September, up from 2.9% in August Strong jobs market sees UK rents increase by 3.7% in last year to 1,281 first increase in annual growth since February Rent rises for one bedroom flats accelerated sharply in September, sparked by high demand from recent graduates renting to live near their first job. Rents for one beds saw an annual rise of 3.9% in September, up from 2.9% in August, reaching an average of 1,054 according to the monthly Landbay Rental Index, powered by MIAC. (See Chart 2: Annual rate of change in UK rents by number of bedrooms) The new index, which launched last month, is the first to track rental trends to the county and London borough level in combination with the number of bedrooms. Edinburgh (up 12%), Swindon (up 11%) and Southend on Sea (11%) saw the biggest rises in rents for one bed flats, albeit from lower average rents than some of the other areas to see big year-on-year increases. (See Table 1: Top Ten Rental Risers 1 bedroom) Last week Government labour market statistics revealed that the UK has the lowest unemployment rate since The employment rate for those aged is at its highest level in over twenty years (81.1% employment rate). While the costs of renting are increasing, this coincides with a fall in other costs (September CPI) and UK-wide wages rising at 3% (UK Labour Market statistics).

3 Chart 1: UK rent compared to average wages Wages January 13 - September 15 1,300 1,280 1,260 1,240 1,220 1,200 1,180 1,160 1,140 Rents Average monthly rent prices Average weekly wages (ONS) Sources: Rents from the Landbay Rental Index powered by MIAC. Wage data from the ONS The index reveals that rents for three bed properties are seeing the biggest overall rental rises, up 4.8% year-on-year to 1,489 in September. Across all properties, UK rents rose by 3.7% in the last year to an average 1,288. This was the first increase in annual growth since February, when the average monthly rented price was 1,277. (See Table 2: UK rental increases) Areas to see rents grow are clustered in the South East Across all property sizes, the top rental risers outside of London were in the South East, with all but two of the top ten rental risers (Swindon and Edinburgh) clustered around London. (See Table 3: Top Ten Rental Risers outside of London) By contrast only one of the top ten rental fallers (Buckinghamshire) was located in the South East. (See Table 4: Top Ten Rental Fallers outside of London)

4 Chart 2: Annual rate of change in UK rents by number of bedrooms Table 1: Top Ten Rental Risers 1 bedroom Areas outside of London Annual rental change (September 2015) Average rent Edinburgh City 12.0% 671 Swindon 10.9% 564 Southend on Sea 10.5% 610 Reading 10.1% 778 Milton Keynes 9.5% 748 Medway 9.3% 621 Hertfordshire 8.2% 798 Bedfordshire 7.5% 555 Essex 7.3% 653 Windsor and Maidenhead 6.8% 925

5 Table 2: UK rental increases all bedrooms Rent changes in UK and nations Annual rental change (September 2015) Average rent United Kingdom 3.7% 1,288 England 3.7% 1,325 England exc London 2.8% 746 Northern Ireland 10.2% 561 Wales 3.5% 608 Scotland 3.1% 694 London 4.1% 2,057 Chart 3: annual rate of change in rents for the UK all bedrooms Chart 4: UK average rents all bedrooms

6 Table 3: Top Ten Rental Risers outside of London all bedrooms Areas outside of London Annual rental change (September 2015) Average rent Southend on Sea 11.5% 765 Luton 9.8% 714 Swindon 9.7% 657 Bedfordshire 8.1% 739 Reading 8.1% 978 Milton Keynes 7.9% 902 Medway 7.9% 752 Edinburgh City 7.8% 932 Hertfordshire 7.3% 1,129 Bath and North East Somerset 6.8% 924 Table 4: Top Ten Rental Fallers outside of London all bedrooms Counties outside of London Annual rental change (August 2015) Average rent Aberdeen City -7.5% 837 Cheshire -6.9% 695 Vale of Glamorgan -4.4% 579 Buckinghamshire -3.4% 1,142 Stockton on Tees -2.7% 500 Aberdeenshire -2.6% 1,425 Middlesbrough -2.6% 457 North Yorkshire -2.4% 637 South Ayrshire -2.4% 466 Durham -1.6% 455

7 Spotlight on the data from MIAC: The volume of properties for rent in the UK for September remains high but fell slightly compared to August, which saw the most activity so far this year. We expect to begin to see a small decline in data volume in the run up to Christmas and this will be monitored closely for its influence on the emerging trends.

8 Landbay Rental Index, powered by MIAC Spotlight on London Results for September 2015

9 Landbay Rental Index, powered by MIAC September 2015: London Key Findings: Rents for one bedroom flats average more than 1,000 in three quarters (73%) of London Boroughs One bedroom rent rises spread outward across London as Waltham Forest and Harrow tip over 1,000 Rents for one bedroom flats average over 1,000 a month in three quarters (73%) of London Boroughs,* according to the monthly Landbay Rental Index, powered by MIAC. (See Table 1: London average monthly rents one bedroom) Only nine London Boroughs have average rents for one bed flats below 1,000 per month. This is down from 11 at the start of the year, after Waltham Forest and Harrow climbed into the 1,000 a month boroughs in April and May this year. Lewisham and Kingston-Upon- Thames joined the group in The next London Borough set to join this group is Enfield, currently on 990. A Londoner paying rent of a 1,000 a month has to earn 31,200 before tax to avoid spending over half of their net income on rent. To keep the cost of renting below a third of their net income, they would need to earn 49,500 before tax. Kensington and Chelsea top the board for most expensive rents for one bedroom properties, averaging 2,275. To the South East of the city, Bexley offers the cheapest average one bedroom rent prices at 791, yet with annual rent increases of 9.8% in the borough among all properties, this price could soon reach over 1,000. (See Table 2: Top Ten London Rental Risers all bedrooms) Across all bedroom numbers in London rents have risen 4.1% in the last year to an average of 2,057 in September. (See Table 4: Annual change in price by number of bedrooms) While the costs of renting are increasing, this coincides with a fall in other costs, such as groceries (September CPI), and UK-wide wages rising at 3% (UK Labour Market statistics), with wages in London likely to be rising faster.

10 Table 1: Average monthly rents one bedrooms London Boroughs Average one bedroom rents (September 2015) Kensington and Chelsea 2,275 City of Westminster 2,218 City of London 2,057 Camden 1,729 Islington 1,657 London average 1,541 Hammersmith and Fulham 1,508 Southwark 1,499 Hackney 1,474 Lambeth 1,472 Tower Hamlets 1,472 Wandsworth 1,457 Richmond Upon Thames 1,376 Hounslow 1,257 Brent 1,251 Ealing 1,216 Merton 1,212 Haringey 1,167 Newham 1,149 Greenwich 1,125 Barnet 1,110 Lewisham 1,066 Kingston Upon Thames 1,049 Waltham Forest 1,021 Harrow 1,021 Enfield 990 Redbridge 966 Hillingdon 937 Bromley 934

11 Barking and Dagenham 909 Croydon 906 Sutton 863 Havering 825 Bexley 791 Table 2: Top Ten London Rental Risers all bedrooms London Boroughs Annual rental Average rent change (September 2015) Richmond Upon 12.5% 1,777 Thames Hammersmith and 10.6% 2,033 Fulham Barking and 9.7% 1,152 Dagenham Waltham Forest 9.2% 1,232 Bexley 8.9% 979 Ealing 8.8% 1,582 Barnet 8.4% 1,605 Havering 8.1% 1,041 Newham 7.9% 1,482 Enfield 7.9% 1,243

12 Table 3: Bottom Ten London Rental Risers all bedrooms London Boroughs Annual rental Average rent change (September 2015) City of London -6.1% 2,362 Tower Hamlets -0.3% 1,876 Camden 1.0% 2,378 Islington 1.6% 2,019 Southwark 2.9% 1,830 Greenwich 3.0% 1,430 Hackney 3.1% 1,893 Merton 3.4% 1,550 City of 3.6% 3,355 Westminster Kensington and Chelsea 4.1% 3,290 Table 4: Annual change in price by number of bedrooms Number of Annual rental bedrooms change (September 2015) 0 (studio) 2.7% 1 4.0% 2 4.0% 3 5.8% % * Includes City of London as a borough

13 Spotlight on the data Table 1 shows the average rent for London one bed properties ranking at sixth, when measured against all the individual boroughs, which is an indication of both the wide distribution of London prices and the high frequency of rental properties that reside in the more affluent central areas of London such as City of Westminster, Camden, Islington and Kensington and Chelsea. There is a lack of symmetry in the price range for rental properties, with a longer tail on the right hand side of the distribution, and that is even starker for London properties. This means that the average estimates more commonly lie above the median than below. However, as with the mean average detailed in the headline, it is worth noting that 73% of the London Boroughs (24/33) also exhibit median values for 1 bedroom properties above 1,000. About the Landbay Rental Index The Landbay Rental Index, powered by MIAC, includes unique granular level detail, looking at local trends to the county and London Borough level, which it can also analyse by number of bedrooms. The quality 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 data points are analysed each month to form the index. The index is mix adjusted for property type, number of beds, county/london Borough, region and country to ensure that change in the composition of the data over time does not skew the results. MIAC employs sophisticated smoothing techniques and interpolation to filter noise and optimise the signal from the data. Outliers are identified across all dimensions, such as number of bedrooms and location, via statistical techniques (including winsorisation) and are removed in order to stabilise the maximum and minimum values over time for each aspect of the data. Outliers greater than the 99th percentile and lower than the 1st percentile are removed and these thresholds are monitored over time.

14 This material in this report is for informational purposes only. It is not intended as investment advice and Landbay are not soliciting any action based on it. The material is based on information that Landbay considers reliable, but we do not represent that it is accurate or complete and it should not be relied upon as such.