2018 bucked the trend and was the first year since the global financial crisis of 2008 to record a decrease in average rents – great news for renters across the country. Data and analysis produced by The Deposit Protections Service (DPS), a government-backed group that supervises tenancy deposits, showed that the average rent fell by &9 (1.17%) to &765 per month. With wages increasing by 2.83% on average throughout 2018, renters should be finding their properties even more affordable thanks to the confluence of increasing wages and decreasing rents.
The data showed that the average percentage of wages spent on rent dropped to 31%, according to the DPS Rent Index. Of course, this changes regionally with London continuing to have the most expensive rents in the UK at &1,924 pcm, 69% above the national average, and the North East the most affordable at &529 pcm. These differing rents must also be noted in the context of differing wages – with the average London wage more than &10,000 higher than the national average income of &28,677.
Julian Foster of Computershare Investor Services, which produced the annual report for DPS, had this to say on the analysis produced: “This first drop in average annual rents for almost 10 years is good news for UK renters, especially if wages continue to climb in 2019.”
This fall in rent had certainly not been forecast, in fact, quite the opposite had been expected following new higher taxes on mortgaged buy-to-let properties. With the Tenants Fee Bill also due to be passed into law in the summer of 2019, renters could find themselves having to pay even less in terms of rental fees and penalties. This heady combination could signal a much more affordable, and therefore fluid, rental market in the UK with more people able to save for a deposit to buy their own property whilst renting, and others able to afford to move out from living with family and rent their own property.
In terms of the property market, 2018 proved to be an exceedingly interesting year, with political instability unable to shake the market to the extent previously predicted. During this relatively stable period for the housing market, wage growth rose at its fastest rate since 2008, with inflation simultaneously dropping to 2.1%. Naturally, this is welcome news for renters who should find themselves with slightly more disposal income than was previously the case – great news for the economy as a whole and for the property market.
