HomeLet Rental Index

HomeLet Rental Index HomeLet is the UK s largest supplier of tenant referencing to the lettings industry. The HomeLet Rental Index shows agreed rental prices, from over 3,000 letting agents each month, rather than prices that are advertised on property portals. The HomeLet Rental Index: Has access to the largest volume of data on agreed rental amounts in the UK Shows agreed rental amounts rather than advertised rents Provides UK and regional information on tenants, including their age, gender, employment status and the type of property they previously lived in Will continue to be developed to provide further details on the performance of the Private Rented Sector (PRS) August 2011 Headlines Average rents across the UK are now 791 per month, an increase on July 2011, meanwhile average salaries have dropped slightly London is continuing to set new records with rents standing at 1,202 up 4% compared to last month and an increase of over 12% since August last year. Rents in London are now a record 52% higher than the UK average Tenancy lengths are decreasing there are now only two of the twelve regions in the UK where average tenancies are more than two years this compares with seven regions in 2009 There is a large gender pay-gap, with average salaries for men being 40% more than women Younger women (aged 18-25) are more likely to rent than younger men but this trend reverses when tenants enter the 26-35 year age group On average the North East is home to the oldest tenants in the UK, with the youngest living in London and Northern Ireland East Anglia has seen a dramatic increase in both rents, and average salaries over the last month

Welcome to the HomeLet Rental Index HomeLet is the UK s largest supplier of tenant referencing to the lettings industry and, as the market leader, we re proudly partnered with over 3,000 letting agents across the UK. In the last three years alone we ve referenced over a million tenants, and each and every day we help around 2,000 people move home. This gives us access to a wide range of information and a unique insight into the performance of the PRS. In August we referenced over 37,500 tenants. Industry insight The HomeLet Rental Index contains analysis from Managing Director, John Boyle. John has worked in senior roles in both the lettings and insurance industries for many years. He uses his experience to provide expert commentary on the Rental Index and PRS. Monthly change in UK rental prices 810 785 760 Average Rent ( ) 735 710 685 660 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 The figures also show The South West saw the largest monthly fall in rental prices, down 2.2% compared to July however at 753 rents are still higher than 12 months ago Only one region in the UK, the North East, has seen average rents fall over the past 12 months Outside of London, Wales has seen the most dramatic increase in rents, rising 6.5% over the year to 586 Annually there has been a small increase in the percentage of tenants who were previously living with a relative before they moved In August 2011, 44% of tenants moved from another rented property, which remains at the same level as August 2010 Page one

Monthly change in Greater London rental prices 1200 1000 Average Rent ( ) 800 600 400 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 London Ave UK rent North East Variation between Greater London rental prices and the UK average 60% 50% 40% 30% Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 The figures also show Rents have now broken through the 1,200 mark, standing at 1,202 which is up 4.1% compared to last month and an increase of more than 12% over the last 12 months Average salaries have increased by just 2.5% in the last 12 months, adding to the financial squeeze for tenants in the capital Average tenancy lengths have dropped in the last two years from 27 months, down to 22 months The average age of tenants has dropped in recent months, and now stands at 30.5 which is the youngest in the UK, joint with Northern Ireland Once again, tenants in Greater London will be feeling the pinch a slow-down in the increase of average salaries has been coupled with yet another inflation-busting rise in average rents. News that the average age of tenants are now amongst the youngest in the country could indicate that a shortage of social housing is impacting younger families who are turning to the Private Rented Sector for accommodation. John Boyle, HomeLet Managing Director Page two

Monthly change in UK average tenant income 28000 27000 Average Income ( ) 26000 25000 24000 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun-11 Aug-11 August average tenant income by tenant demographics 40,000 35,000 Average income 30,000 25,000 20,000 15,000 10,000 5,000 18-21 22-25 26-35 36-45 46-55 56-65 66-70 71+ The figures also show Age (years) Whilst London salaries remain the highest in the UK, Wales is now the area where tenants earn the lowest salaries East Anglia has seen the highest increase in average salaries (7% rise) from 25,035 up to 26,818 This region has also seen a sharp increase in rents since last month (up 5.89%) from 662 to 701 Tenancy lengths in East Anglia are the shortest across the UK, joint with Yorkshire and Humberside, East Anglia also has the second oldest tenants in the UK at 33.6 years old The combination of increased average rents and salaries could suggest there is fierce competition for rented homes in East Anglia. The fact that the region is also home to some of the oldest tenants in the UK does suggest younger people are being priced out of the market. John Boyle, HomeLet Managing Director Page three

Monthly change in average tenant age 34 2009 2010 2011 33 Age (years) 32 31 Jan Feb March April May June July Aug Sept Oct Nov Dec The figures also show The average age of tenants has dropped to 31.9 lower than both last month, and slightly lower than the same time last year Greater London and Northern Ireland are now home to the youngest tenants Meanwhile the North East region is home to the oldest tenants, at 34 years old We see seasonal trends in the letting industry, so we d expect the average age of tenants who re moving to decrease in August. But the average age of tenants has dropped to a two year low. When looking in closer detail, it appears that slightly more young men aged 18-21, and more women aged 22-25 are renting a home when compared to August 2010 and 2009. There could be a number of factors for this, such as the reduced availability of social housing and the increase in the number of students in the UK. John Boyle, HomeLet Managing Director Page four

Spotlight on the North East In this section we take a closer look at one particular region in the UK. Here are some further details on the North East: There has only been a very slight increase in rents when compared to August last year making it still the cheapest place to rent a home in the UK It s one of just two regions which has average tenancy lengths of more than two years Average salaries have dropped this month, down to 22,392 one of just five regions to see a fall According to research published by the Nationwide on 1st September the North East has seen a dramatic 8.8% drop in house prices over the last year, this is the largest drop in the country Meanwhile unemployment levels unexpectedly improved in this region according to figures released in August by the ONS. Each region in the UK has its own trends and it s interesting that the North East, which is the cheapest place to rent, is also the home to the oldest tenants in the UK. In this particular region the average age is being pushed up by both a reduced number of younger tenants and an increase in older tenants. Despite having the lowest rents in the country, the level of youth unemployment remains high in the North East, so those traditional first time renters are not entering the market at the rate seen in the last few years. At the other end of the spectrum older tenants are choosing to rent rather than buy their own property. We know that older tenants have a higher level of disposable income and with lower sales prices in the region we might expect them to move out of the PRS. But any hint of economic recovery is still in its infancy in this region and there are still fears that house prices could dip further, causing yet more negative equity. The balance of supply and demand is delicate, and with people renting for longer there could be less churn of sought after accommodation in the region, particularly larger family homes in desirable areas. So, despite slightly lowered incomes we may see demand for certain types of rented property grow further in the region and push prices up in early 2012. With homeownership levels set to drop further in the UK the PRS in the North East, like many other regions, is providing an affordable, stable and long term alternative to home ownership. John Boyle, HomeLet Managing Director Page five

Regional breakdown Scotland Average rent Aug 2011 580 Average rent July 2011 586 Monthly variance -1.02% Average rent Aug 2010 570 Annual variance 1.75% North West Average rent Aug 2011 630 Average rent July 2011 616 Monthly variance 2.27% Average rent Aug 2010 598 Annual variance 5.35% North East Average rent Aug 2011 542 Average rent July 2011 538 Monthly variance 0.74% Average rent Aug 2010 545 Annual variance -0.55% Yorkshire and Humber Average rent Aug 2011 576 Average rent July 2011 572 Monthly variance 0.70% Average rent Aug 2010 566 Annual variance 1.77% East Midlands Average rent Aug 2011 572 Average rent July 2011 577 Monthly variance -0.87% Average rent Aug 2010 558 Annual variance 2.51% West Midlands Average rent Aug 2011 627 Average rent July 2011 604 Monthly variance 3.81% Average rent Aug 2010 591 Annual variance 6.09% East Anglia Average rent Aug 2011 701 Average rent July 2011 662 Monthly variance 5.89% Average rent Aug 2010 666 Annual variance 5.26% Wales Average rent Aug 2011 586 Average rent July 2011 581 Monthly variance 0.86% Average rent Aug 2010 550 Annual variance 6.55% Greater London Average rent Aug 2011 1,202 Average rent July 2011 1,154 Monthly variance 4.16% Average rent Aug 2010 1071 Annual variance 12.23% Northern Ireland Average rent Aug 2011 584 Average rent July 2011 587 Monthly variance -0.51% Average rent Aug 2010 573 Annual variance 1.92% South West Average rent Aug 2011 753 Average rent July 2011 770 Monthly variance -2.21% Average rent Aug 2010 738 Annual variance 2.03% South East Average rent Aug 2011 835 Average rent July 2011 816 Monthly variance 2.33% Average rent Aug 2010 802 Annual variance 4.11% Page six

Coming soon We re committed to continually developing the Rental Index, and we ll be introducing a range of additional data that could include: The percentage of tenants with County Court Judgments Average tenants employment status by region Greater London information split by borough Detailed information on the rented properties, such as: - Type of house - Number of bedrooms - Age What do you think? We re producing the HomeLet Rental Index for you, so we d love to hear what you think If you re a HomeLet customer you can give us your feedback on the HomeLet Rental Index by logging on to MyConnect and posting your comments. Alternately you can email marketing@homelet.co.uk How do we do it? The data included in the HomeLet Rental Index is compiled by HomeLet s Business Information Analysis team. The data included in the HomeLet Rental Index should be used as an indicator only. Further details on how the data has been compiled can be found on the HomeLet website. You can find out which postcodes are included in each region of the Rental Index by visiting homelet.co.uk/rentalindex Call today: 0845 155 7999 Or visit us online: homelet.co.uk follow @Homelet on Twitter or find us on Facebook.com/HomeLet HL1759 09/11 HomeLet is a trading name of Barbon Insurance Group Limited which is authorised and regulated by the Financial Services Authority. Registered in England number 3135797. Registered office address: 4-9 Highview, High Street, Bordon, Hampshire. GU35 0AX