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UK Rental Market Soars: Average Rental Costs Surge Amidst Market Fluctuations

LONDON — The steady surge in average rental costs continues to captivate the UK housing market, as the latest data unveils the endurance of a remarkable ascent.

According to the recently published Rental Index by Goodlord, the cost of renting has experienced a substantial 10% year-on-year increase, reinforcing the formidable challenges faced by tenants. Although the month of August witnessed a slight easing in void periods compared to the historic lows of July, these vacancies remain considerably lower than the year-to-date averages.

During the transition from July to August, there was a marginal dip in the average rent prices, resulting in a 1.5% decrease, bringing the national average to £1,347 per calendar month (pcm) per property across England. Despite not surpassing July’s record-setting figure of £1,367pcm, the August 2023 prices signify a remarkable 10% surge compared to the corresponding period last year. Furthermore, these average rental costs stand at an astonishing 15% above the year-to-date average for 2023.

Typically, rental prices experience an upswing during the summer months due to an influx of student lets. This year, this seasonal trend has been compounded by longstanding pressures within the rental market, which have propelled prices to unprecedented heights.

The regions of Greater London and the South East observed the most substantial increases in average rental prices. The capital experienced an 8% uptick, while the South East region recorded the highest surge at an impressive 14%.

Conversely, the North West region experienced a notable 20% decrease in average rental prices, reflecting a pattern observed in the same period last year (2022), characterized by a significant spike in July, followed by a more subdued August.

The North East (-6%) and the South West (-10%) also witnessed declines in rental prices after witnessing significant increases during July. Notably, void periods displayed a modest respite following the intensity of July, with average void periods extending from 9 days to 13 days in August. Nonetheless, August marked the second-lowest month for voids since July 2022.

The most notable shift was observed in the South West, where voids increased from 6 days to 13. The North West followed suit, with averages rising from 7 days to 14. Both regions also recorded the most significant declines in the average cost of rent.

In contrast, Greater London and the South East, both of which witnessed rising rental costs, reported no change in average void periods.

William Reeve, CEO of Goodlord, remarked on the situation, stating, “There were so many records broken in July, it’s not altogether surprising to see a slight dip in average rents and slightly longer void periods during August. However, when you look at the bigger picture, the market is clearly still running extremely hot.”

Reeve further emphasized, “Year-on-year averages for rental costs are significantly increased, with the £1,300 per month barrier now broken for a second month in a row. September often brings with it the annual peak in prices, so it’s likely that we’ll see another month of high rents and short voids before any seasonal shift in pace kicks in.”