Average rents hit a new record high of £571 per week during October, driven by rising interest rates and lack of supply breaking the previous record of £553, according to the latest data released by Foxtons.
This is a 4% uplift in comparison to September, which would typically be the peak for the lettings market. Central London continued producing the highest average weekly rent this year at £643 per week, a 29% increase on prices seen in October 2021.
There were 22 renters competing for every new property in October 2022, which is higher than any October Foxtons has recorded in 2021, 2020, or 2019. While the number of renters competing has decreased from September, October’s 22 renters per new instruction is 40% higher year on year.
In October, demand for properties in London followed the usual seasonal downward trend, with a 38% reduction in renter registrations from September 2022 to October 2022. However, when compared to October 2021, renter registrations are still 2% higher. With intense competition in the Capital, renters have turned their attention towards the outer zones. In South London, registrations are up 37% from 2021, and in West London, registrations are up 57% from 2021.
Applicants’ weekly budgets remained much higher than they typically do in October. The average weekly renter budget in October 2022 was £485, which is over £20 more than the average budget in October 2021. Year to date, budgets are 7% higher compared to 2021.
For the second month in a row in 2022, Foxtons saw renters spending over their budgets to secure a property. In October 2022, renters spent 101% of their registered budget, a 3% increase compared to October 2021.
Gareth Atkins, Managing Director – Lettings, said, “Throughout our front offices and within our renewals team, October has proved to be a very busy month. Competition for London lettings is intense.
“Average rent prices have reached a new record at £571 per week, and we’re seeing a return to renters spending over their registered budget at 101% on average (a number we haven’t seen since before the pandemic). One reason for the competition is the rising interest rates, as renters who were considering homeownership are now looking to renew or find their next rental. Another reason is the sheer lack of supply.
“October saw the lowest monthly volume for new listings year to date. With rapidly expanding government regulations and the highest single lift in interest rates the UK has seen in years, landlords have a lot more to factor into their business plans going forward, so we’re likely to see these unusual trends continue further into Q4.”
Sarah Tonkinson, Managing Director – Institutional PRS and Build to Rent, added, “The lettings market usually follows a set pattern with August and September as the busiest months of the year, followed by a quiet Q4. However, this October’s £571 average rent prices actually surpassed September’s record high, which is a huge departure from the normal trend.
“Typically, Londoners don’t want to move house around the holidays, and we often help negotiate different tenancy lengths between landlords and tenants, like 15 months instead of 12, to avoid properties coming on the market this time of year. Instead, there were 22 applicants per new listing last month, which is higher competition in October than we’ve seen even pre-pandemic in 2019.
“We mentioned, in previous Lettings Market reports, that this might be an unusually busy Q4, and so far, it’s turning out to be absolutely true.”