The cost of renting a home in the North of the UK compared to the South is almost twice what it was six years ago according to the latest HomeLet Rental Index.
As of January 2014 it is 69% more expensive to rent a home in the southern regions of Greater London, the South East and South West, than in regions around the rest of the UK, compared to January 2008 when the difference between the regions was just 37%.
Gary Abraham, HomeLet’s Sales and Marketing Director, said: “Our latest data certainly shows that the rate at which rental values are increasing has slowed down following the rapid growth we saw immediately after the 2008 housing crisis. However, whilst more people are now buying, a reported increase in house prices means that buying remains unaffordable for many, particularly in the Capital, and some would-be-buyers may worry about the prospect of factors like negative equity or large deposits.
“A lack of affordable housing stock in the south could be one of the drivers for the growing divide we’re seeing between rental values in the North and the South. Our data shows that the difference in cost between renting a home in the South compared to the North has increased for the sixth consecutive year.”
The overall UK average rental figure decreased by 1.7% in January to £800 per month, but despite this fall rental amounts are still on average 2.4% higher than the same time last year.
Abraham said: “With UK home sales at the highest for six years (according to recent figures released by RICs) we might expect tenant demand for property in the private rented sector to drop in 2014, as they potentially begin moving in to owner occupied accommodation.
“Whilst the owner occupied market might be stabilising, the private rented sector is becoming a much longer term housing solution for many. We’re seeing a combination of increased average tenant ages, increased income and previous tenancy length.
“This month’s HomeLet Rental Index data shows the average age of a tenant increased during the past 12 months to reach 34. We also saw average income of tenants across the UK increased by 5% over the same period to £28,500 per annum and previous tenancy lengths increase by 6% to reach an average of 21.4 months.
“I believe the private rented sector will continue to expand in 2014, but frequency that tenants move will decrease. And whilst rents will continue to rise marginally year-on-year we won’t see the dramatic increases in rental values that we’ve seen in the past few years.”
