Rent rises for one bedroom flats accelerated sharply in September, sparked by high demand from recent graduates renting to live near their first job.
One beds saw an annual rise of 3.9 per cent in September, up from 2.9 per cent in August reaching an average of £1,054, according to the monthly Landbay Rental index, run by MIAC.
The new index launched last month and is the first to track rental trends to the county and London borough level in combination with the number of bedrooms.
Edinburgh was up 12 per cent, Swindon was up 11 per cent and Southend on Sea was up 11 per cent.
These areas saw the biggest increases in rents for one bed flats, albeit from lower average rents than some of the other areas to see big year-on-year increases.
Landbay added that while the costs of renting are increasing, this coincides with a fall in other costs (September CPI) and UK-wide wages rising at 3 per cent (UK Labour Market statistics).
Rents for three bed properties are seeing the biggest overall rental rises, up 4.8 per cent year-on-year to £1,489 in September.
Across all properties, UK rents rose by 3.7 per cent in the last year to an average £1,288. This was the first increase in annual growth since February, when the average monthly rented price was £1,277.
John Goodall, co-founder and chief executive officer of Landbay, said: “The upward trend in UK rents can simply be explained with one word, jobs. The UK’s job market is going from strength to strength and the rental market is staying hot on its heels.
“The sharp seasonal jump in rental growth for one beds reflects a buoyant graduate job market as people move to their first job.
“Flexibility and freedom is the order of the day for first jobbers, and one bedroom flats offer the perfect springboard to take the plunge into full-time working life. One bed flats are also popular for couples and young professionals who don’t want to flat-share.
“Higher housing costs can be a nightmare for tenants when other costs are rising and their wages are stagnating. Fortunately these rent increases come at a time of growing wages and falling costs, according to the latest inflation figures, so while they may not be welcome they don’t leave the same dent in consumers’ pockets.
“For potential investors, these rental figures show how resilient residential property is as an asset class – even when you have unusual economic forces combining like the current mix of low inflation, low interest rate, and high wages.”
Joe Macklin, director at MIAC said:“The volume of properties for rent in the UK for September remains high but fell slightly compared to August, which saw the most activity so far this year.
“We expect to begin to see a small decline in data volume in the run up to Christmas and this will be monitored closely for its influence on the emerging trends.”
ruth.gillbe@ft.com
