The latest research by Zero Deposit, the tenancy deposit alternative, has highlighted the need for diversity when it comes to the provision of rental market stock, with tenant demand driving an equally strong level of rental growth across all property types in the current market.
Zero Deposits analysed the latest rental price data from the Office for National Statistics*, looking at both the split in rental price performance across each region, as well as how it differs across each property type.
The research shows that the average rent across Britain has climbed by 9.1% over the last year. Of course, this rate of growth differs when breaking the market down at a regional level, with both London (11.2%) and Scotland (10.5%) enjoying double-digit rates of annual growth, while rents have climbed by just 6.1% across the North East during the same time period.
Both London and Scotland again lead when it comes to the strongest annual rate of rental market growth seen across all property types, with the exception of semi-detached homes, as the West Midlands sits in second behind the capital with annual growth of 9.7%.
But while there may be a high degree of regional variation across the rental market from one region to the next, the analysis by Zero Deposit shows that it’s a far more level playing field when it comes to the growth seen by property type within each specific region.
Across Britain, the average rental price of a detached property has increased by 8.6% over the last year, while the average cost of renting a semi-detached home is up 8.7%. Terraced homes have seen growth of 8.5% and while flats have performed the strongest, this rate of growth is only marginally higher at 9.9%.
This means there’s just a 1.4% swing between the lowest rate of rental growth (detached homes) and the highest (flats).
However, at a regional level, this gap closes to 0.8% or less across all regions but one.
In Scotland, the current rental price of a detached home has increased by 12.9% annually, while terraced home rents have seen growth of just 9.5%, a difference of 3.3%. This makes Scotland the most uneven rental market when it comes to growth in rental prices.
In contrast, the North West and East of England are home to the most level rental market playing fields, where the gap in rental price growth between the best and worst performing property types sits at just 0.5%.
Sam Reynolds, CEO of Zero Deposit said, “Although renting remains a necessity for a great number of tenants, we’ve seen a distinct lifestyle change in recent years whereby many are renting until far later in life out of choice, due to the greater degree of flexibility it allows them.
Of course, residing within the rental sector doesn’t put life on hold and as tenants reach certain milestones, such as marriage and children, their rental property requirements evolve.
So it’s hardly surprising that we’ve seen a consistent level of rental price growth across the board over the last year and while flats may be the predominant property type of choice for the majority of renters, there’s certainly a greater degree of demand for larger homes suitable for family life.”
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