Average rents have increased by 12% compared to their pre-recession peak. In London rents have risen from an average £966 to £1,295 per month since 2007.
Across the UK, one in five tenants are paying less rent than they did pre-recession, down from one in four last year. The North West, North East and Wales are the only regions where the average tenant is paying less than they did nine years ago. Considering current growth rates, they are expected to surpass 2007 levels halfway through this year.
Rents have been growing steadily inline with incomes at 12% since 2007. In London, incomes have grown by 10% while rents have increased by 34% due to a lack of supply and high demand.
Johnny Morris, research director at Countrywide, said: “Nationally rents in January rose at the slowest rate since 2012, as some of the upward pressure on prices subsided and affordability limited further rises. Across most of London and the South East the slowdown in rental growth is the first since 2010, where rents have been growing for the past 6 years.”
He added: “The most sustainable way of creating a more affordable rental market in London and the south is by building more homes of every tenure. Unlike in the US where institutional investors build homes to rent, in the UK the sector is dominated by small landlords meaning the link between new homes getting built and the rental market isn’t nearly as close as it should be.”