As a lettings agency specialising in managing HMO rooms and owned by HMO investors, we are always keeping a watchful eye on the market. The most recent data on room rents makes for sobering reading.
Room rents continue to rise rapidly across the UK, reaching new highs in the third quarter of 2023 according to property advertising website SpareRoom. On average, rents rose by 16% year on year when compared to Q3 of 2022, hitting a national average figure of £721. Average room rents rose by at least 10% in every single UK region – including every London suburb – and almost every one of the UK’s largest towns and cities when compared to Q3 2022. The largest regional increase was seen in Northern Ireland (up 19%).
In London average room rents have soared, hitting £989. The biggest rises seen in the North of the capital (up 17%), followed by South East, West Central, East and North West regions, all up 16%. In some parts of London rents have increase nearly 40% year on year.
Rents have also increased in all the UK’s 50 largest towns and cities, with Belfast (up 25%), Edinburgh (up 22%) being two of the largest increases. Edinburgh is now the most expensive urban area outside of London with average monthly room rents of £896.
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So, what is going on?
As we have reported on before, it will come as no surprise that these increases are largely driven by supply and demand coupled with increased operational costs for property owners being passed on to the end user – the renter.
Supply is being hit by landlords exiting the market due to reduced profitability. This is driven by legislative burdens (proposed Renters Reform Bill) plus increased costs such as utilities and mortgage costs. Maintenance costs have also increased due to a shortage of skilled trades people – particularly and increased quality expectations from tenants. In Scotland in particular rent controls – originally a temporary measure that is now permanent – are also now having a significant negative impact on supply.
We don’t see the situation changing anytime soon until these increased operational costs have worked their way fully through to rents (note: rents can only be increased once a year, whereas operational costs can increase instantaneously). In addition, landlords need assurances from the government on the future legislative landscape and other incentives to invest, to boost supply.
At Lifeboat Lettings we will always help and advise landlords and assist where we can.
If you would like some help with any of the subjects covered above or anything else relating to properties or lettings, please email contact@lifeboatlettings.com.
