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Renting in 2021: what should I know?

Renting in 2021: what should I know?
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What are the most affordable areas to rent? What areas of the UK have the potential for great returns for buy-to-let investors? The Hamptons Monthly Lettings Index shows renting data for August 2021, and we can see the average rent on new lets in different areas. Let’s find out what this data means.

What’s the average cost of renting in the UK?

Hamptons Monthly Lettings Index for August 2021 indicates that the average rent on a new let in the UK is as follows:

 

August 2020

August 2021

Year-on-year change (%)

Year-on-year change (£)

Greater London

£1,765

£1,790

1.4%

£25

Inner London

£2,322

£2,117

-8.8%

-£205

Outer London

£1,662

£1,727

3.9%

£65

South East

£1,075

£1,213

12.8%

£138

South West

£868

£989

13.9%

£121

East of England

£985

£1,092

10.9%

£107

Midlands

£708

£763

7.8%

£55

North

£674

£738

9.5%

£64

Wales

£697

£749

7.5%

£52

Scotland

£678

£751

10.8%

£73

Great Britain

£1,010

£1,085

7.4%

£75

Great Britain (excluding London)

£817

£904

10.6%

£87

If you’re thinking of renting, the data above should help you identify the most affordable areas. Likewise, if you’re thinking of buying to let, you can get an idea of the ideal areas of the UK to invest in.

Will rents increase in 2021?

The figures above indicate that rent in Great Britain is increasing gradually, with the most substantial growth being in the Southern regions outside London.

The lockdown and restrictions that came with the pandemic forced people to make significant changes, including moving out of London. This led to lowering demand for rentals in London and increasing demand in regions outside the capital.

Many landlords in London reduced rent to attract tenants, while rent in areas outside of London increased due to high demand and low supply. Now that restrictions have eased, London rents are slowly recovering.

It might also be important to note that the total rent paid by Millennials (those born between 1980 and 1996) has been dropping significantly. The reason for this is that an increasing number of Millennials are becoming homeowners, and far fewer are renting.

Generation Z is expected to pick up the slack. But with so many opportunities for first-time buyers to get on the property ladder, many may skip renting and become homeowners. Others are still living with their parents, contributing to the overall drop in the collective annual rent.

Here’s all of the data to give a clearer picture:

Generation

Total rent paid in 2021

Annual change in rent paid

Share of rent paid

Silent (1928-1945)

£0.7bn

-22%

1%

Boomer (1946-1964)

£9.0bn

3%

16%

Generation X (1965-1979)

£20.1bn

-3%

35%

Millennial (1980-1996)

£24.0bn

-17%

42%

Generation Z (1997-2012)

£3.6bn

102%

6%

 

Is renting better than buying in the UK?

Whether you rent or buy depends on your unique situation. Sometimes, it might make more sense to rent rather than buy or vice versa.

That said, if both renting and buying make sense at the same time, especially when considering a property you want to live in, it’s usually more beneficial to buy than rent.

Not only does homeownership provide you with an asset that increases in value over time, but you gain a financial mindset that influences other financial decisions, like saving, spending and investing.

If it makes more sense to rent based on your personal circumstances, it might be a good idea to read our renter’s guide. It could help you avoid mistakes that have far-reaching consequences.

However, if it makes more sense to buy a property, it might be worth your while to check out our mortgage resources and tools. They will equip you with the knowledge you need before making that first purchase.

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