Residential rents in the East of England increased by 2.35% in the 12 months to July, the fastest rise of any UK region, and nearly four times the average UK growth rate of 0.64%, according to the latest Landbay Rental Index.
The firm said strong demand for low-rent accommodation by long-distance commuters is thought to be a contributing factor, pushing rents up by more than 2% in eight out of the 10 counties in East England, and more than 3% in four of the 10.
Of the capital’s five ‘hottest’ commuter belt hotspots outside the M25, four are found in the East of England. Luton (4.23%), Peterborough (3.75%), Thurrock (3.56%) and Bedfordshire (3.19%) all have average rents less than half of the London average of £1,873, but have all seen rents rise significantly in the past year, while in London they have fallen by -1.05%. The current pace of growth means a tenant in Luton is now paying £789 each month in rent, an extra £250 over the year.
Less affordable areas in London’s commuter belt, those with higher average rents and particularly those in the South East, have seen less demand and therefore slower rental growth.
While the East of England has seen competition push up rents across the board, just three out of 19 counties in the South East have seen rental growth above 2%. It’s telling that those that have, Medway (3.16%), Kent (2.28%) and West Sussex (2.03%) all have affordable average rents, less than half the London average. Indeed the two counties in the South East with the highest rents, Surrey (£1,439), and Windsor and Maidenhead (£1,270) have both seen rents fall, by -0.13% and -0.23% respectively.
Elsewhere, already expensive areas surrounding the capital have seen far less rental growth. In Windsor or Maidenhead, traditionally deemed as ‘desirable’ regions for commuters, rents have seen the biggest slowdown.
Annual UK rental growth slowed to 0.64% in July 2017, less than half of the rate of 1.86% seen at the end of July 2016. Outside of London, the pace slowed to 1.56%, with average rents reaching £756. Within the capital, especially central London, the rents have now been falling for over a year, by -1.05% over the past 12 months.
John Goodall, CEO and founder of Landbay said: “Young people working in London are wrestling with rising inflation on the one hand, and rock-bottom interest rates on the other, so it’s hardly a surprise that people are tackling longer commutes to reduce their rent burden while they save for a deposit on a house of their own.
“Naturally these surrounding areas are starting to experience a surge in rental prices, creating a ripple effect out from the capital. There are of course a number of factors at play, but it’s telling that already expensive areas surrounding the capital have seen far less rental growth, than much more affordable ones.”