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UK Rental Growth Outside London Hits a Four-Year High

Average rents across the UK outside London rose by 1% in the three months to the end of March, taking annual rental growth to 3%, according to the latest Q1 2021 Hometrack Rental Market Report.

This is an increase from the 2.1% annual growth seen at the end of Q4 2020 and marks the highest level of rental growth in four and half years, amid elevated rental demand.

Rental growth hit a 10-year high in March in the North East, South West, East Midlands and in Wales. Rents are rising fastest in the North East of England (5.5%), which is one of the most affordable rental markets in the UK. Rents in the region accounted for a fifth (20.8%) of average income for a single earner in the North East before the pandemic, compared to the UK average of 32%. The growth in rents over the last year has pushed this measure of affordability to 22%, but it still remains one of the most affordable regions in which to rent a property.

The relative rental affordability in the regions showing the highest rental growth means there has been more headroom for rents to rise. For example, in the North East, over the last 10 years, rents have risen by an average of 1% a year, less than the average annual rise in wages. Rental growth rose to 8% in Barnsley and Wigan in the year to March, two of the towns with the strongest rise in rents over the last 12 months.

The rental increase can be compared to the total growth in rents in the nine years leading up to March 2020 which was around 12%. The average growth in UK rents over the same period was 21%.

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