Average rents grew at a faster pace than the rate of inflation in October, but continues to lag behind the pace of wage growth, according to new data from HomeLet.
Renters saw rental bills rise 2.7 per cent in October, with average monthly rents rising to £953. In comparison, the headline measure of inflation, as measured by the Office for National Statistics, rose by just 1.5 per cent in the same month.
Wages grew faster than both average rents and inflation, at a rate of 3.6 per cent in the latest month of available data, in September. This means that rents take up a smaller proportion of an average renter’s annual salary, while in full-time work.
London distorts national picture
The higher value of London properties distorted the national average for monthly rents. Those renting in the capital found their rental bills rose 2.8 per cent in October, so they were expecting to pay £1,665 per month as a result.
Although UK average monthly rents appeared to be close to £1,000 per month, excluding London from the figures reduced the UK’s average monthly rent bill to £788 per month. HomeLet pointed out that this meant London rental values were 111.3 per cent higher than the national average rent, having removed the capital from the figures.
HomeLet’s findings were at odds with recent figures published by PropTech firm Goodlord, who suggested that average rents were showing signs of levelling off.
Labour changes tack
News of rents rising faster than inflation came, as the Financial Times reported that the Labour Party was intending to abandon its proposal to offer a form of right-to-buy scheme aimed at private tenants.
The proposal was originally intended to ensure that millions of private tenants could buy the properties they lived in. Shadow Chancellor John McDonnell explained that the government would step in to set the criteria, to ensure that tenants would be able to purchase properties at a “reasonable price.”
However, many were quick to criticise the proposal when it was announced back in September. The Residential Landlord Association (RLA) warned that Labour’s proposals risked killing off the private rented sector.
Offering tenants a right to buy the properties they rented has the potential to increase homeownership, but critics were concerned that it would simply reduce the availability of rental properties in the process.
Property Notify contacted the Labour Party, to clarify its position on the matter. A Labour Party spokesperson responded: “Labour’s manifesto is a transformative document that will bring real change to the lives of the many, not the few. We will be launching it in full, along with our ‘Grey Book’ of costings, on Thursday. It will be worth the wait.”
The response refers to the anticipated release of the Labour Party’s 2019 election manifesto, expected on Thursday 21st November. According to poll aggregator Britain Elects, the Conservatives have maintained an average lead of 10.9 points over Labour in the run up to a landmark general election on 12th December.
This sizable lead suggests that the Conservatives are likely to have enough support to ensure that they win a majority of seats in December’s snap election.