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Seven out of ten tenancies that were due to end in March were renewed

Some 70% tenancies that were due to end in March were renewed, the highest level recorded in any March since 2008 when 77% of tenants renewed, according to the latest Hamptons International Lettings Index. 

As a landlord, you will understand that a lengthy rental void period is likely to seriously impact on your income, and so it is perhaps unsurprising that rents on renewed tenancies in Great Britain fell 0.5% year-on-year in March amid coronavirus lockdown, marking the biggest fall since the index began in February 2014. 

Seven out of ten tenancies that were due to end in March were renewed

The economic impact of the coronavirus has led to fears about jobs and earnings and in turn caused rents to fall. 

Rents on renewed tenancies fell by 1.4% in the South East, and 0.4% in the East of England, but it was London that recorded the biggest year-on-year fall, down 2.2%.  

London tenants’ incomes tend to be among the most stretched and are therefore more vulnerable to income shocks. 

Meanwhile, Scotland posted the strongest rental growth at 3.4%. Average rents on renewed tenancies rose 2% in the Midlands and 1.6%% in the North of England.      

Average rent of renewed tenancies (pcm)

Region

Mar-19

Mar-20

YoY

Greater London

£       1,694

 £       1,656

-2.2%

South East

£          992

 £          977

-1.4%

South West

£          759

 £          770

1.4%

East of England

£          923

 £          919

-0.4%

Midlands

£          646

 £          659

2.0%

North

£          593

 £          602

1.6%

Scotland

£          626

 £          647

3.4%

Wales

£          613

 £          615

0.4%

Great Britain

£          933

 £          928

-0.5%

Great Britain excluding London

£          737

 £          741

0.5%

Source: Hamptons International

Overall demand for rental accommodation decreased over the course of the month as lockdown measures were enforced. 

The number of new applicants registering to rent a home in Great Britain fell by 31% in March compared with the previous month – a time of the year when applicant numbers tend to rise. But there are signs that applicant demand is starting to increase again, after bottoming out at the end of March.

Meanwhile, the stock of homes available to rent increased in March. There were 11% more homes available to rent in March than in February, yet the supply of homes available to rent is still down year-on-year. 

Wales and the Southern regions, including London, saw the biggest increase in the number of homes available to rent.

Some landlords who typically let their properties as short-lets decided to let their properties on a longer-term basis, and this has partly driven the increase in the number of homes available to rent.  An overall increase in supply combined with a reduction in demand suppressed rental growth on new lets in March.

The average rent on a newly let property in Great Britain rose to £980 per calendar month (pcm) in March, up 1.2% year-on-year.  However rental growth decelerated from 3.3% in February 2020 having slowed in six out of the eight regions. 

Aneisha Beveridge, head of research at Hamptons International, commented: “The first signs of the Covid-19 effect on the rental market are starting to show.  With lockdown restrictions introduced towards the end of March, 70% of tenants chose to stay put and renew their tenancy instead of moving – the highest level since 2008.

“Rents on renewed tenancies fell 0.5% in March marking the biggest fall since the index began in February 2014.  Tenants’ concerns about their future income prospects combined with greater risk of void periods for landlords willing to advertise their property on the open market, resulted in the rent falls.  London, where tenants’ incomes are more stretched, recorded the biggest fall in rents.

“Once lockdown restrictions ease, we expect activity levels to rise.  Renting offers more flexibility than buying a home, so as uncertainty rises, so too does the demand for rental homes.  But although demand for rental accommodation is set to increase, and there are already signs of it picking back up again, the longer-term economic damage to people’s jobs and incomes means that rents on newly let properties are likely to fall between 2% and 5% this year.”

Average rent of new lets (pcm)

Region

Mar-19

Mar-20

YoY

Greater London

£ 1,737

 £       1,714

-1.3%

South East

 £ 1,028

 £       1,053

2.5%

South West

 £    795

 £          828

4.2%

East of England

£    944

 £          970

2.8%

Midlands

£    680

 £          693

1.9%

North

£    630

 £          646

2.6%

Scotland

£    632

 £          673

6.5%

Wales

£    655

 £          653

-0.2%

Great Britain

£    969

 £          980

1.2%

Great Britain excluding London

£    772

 £          792

2.6%

Source: Hamptons International

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