With its sprawling countryside and seaside towns, many people are looking at the South West with hope as a chance to escape the city.
Meanwhile, more and more people choose to rent a property from a private landlord each year. In 2007, 13% of Brits lived in private rented accommodation and just 10 years later, one in five of us did.
If you’re looking at the South West as somewhere to live, you’ll want to know the state of the rental market. Which regions have lower prices? Which are increasing and decreasing?
These questions will be just as relevant to property investors and landlords, so read on for our analysis.
Rental demand in the South West
According to the Office for National Statistics (ONS), private housing rental prices had increased by 2.5% in July 2021 compared to those in July 2020.
That’s good news for investors with property in the region, given that was the highest annual growth rate seen in the UK, matching that seen in the East Midlands.
In comparison, private rental prices paid by tenants across the UK rose by an average of 1.2% in the 12 months to July 2021.
London, meanwhile, saw its rental prices fall by 0.1%.
So, the South West has seen the strongest growth in the market over the last year, but what does that look like for the average tenant’s payments and average landlord’s income?
As of July 2021, the average private rental price in the South West as of July 2021 is £989, up from £948 in June 2021 – an increase of 4.3% – according to lettings insurance company HomeLet.
This is up from the £876 average they recorded in July 2020, although if we take this data for granted, it means the average rent has increased by 12.9% this year, much higher than the 2.5% the ONS has predicted.
Breakdown of rent prices in the South West
Bristol has consistently been the most expensive area in the South West to live in over the last two years. Between April 2019 and March 2020, the mean rental price per month was £1,175, which increased by 1.8% to £1,196 between April 2020 and March 2021.
After the city, Wiltshire’s rental prices are currently the highest according to ONS data, standing at an average of £805 per month. That’s a 2.8% increase from what prices between April 2019 and March 2020.
Prices in Cornwall grew the fastest than any other county between April 2020 and March 2021, increasing by 5.7% to reach £744 according to the most recent data.
This was no doubt fuelled by the stamp duty holiday prompting investors to snap up additional homes to perhaps use as holiday lets.
Rent in Somerset, the cheapest area to currently rent in the South West, increased by 5.3% to reach an average of £735 per month.
Conversely, Dorset and Devon saw their rents decrease between April 2019 and March 2021 by 3.3% and 3.5% respectively and currently stand at an average of £805 and £792 per month.
Finally, there’s Gloucestershire, which saw its rental prices increase by 4% in the same period, with it costing an average of £805 per month to rent there.
Changes in 2022
That’s the most recent official data we have from the ONS right now, but what could happen in 2022? Will rent prices keep rising? And what about beyond?
If rent prices in the South West follow the same trend we’ve seen in the past number of years, then yes, they will.
South West rental prices have risen consistently in the 12 months to July since 2015 as follows:
|Year||Change in rental price (%)|
According to real estate firm Savills, average rental prices are set to rise right up until 2025, starting with a steep jump of 8.5% in 2021, similar to the 9% that the property agent forecasts for the entirety of the UK.
It also predicts rental prices will increase in the South West by 3.5% in 2022, 3% in 2023 and 2.5% in 2024. By 2025, prices may have risen by as much as 20.9% compared to those seen in 2020.
At Evans & Partners, we can help residential landlords run, grow and diversify their property portfolios, while helping them run their business in the most tax-efficient way possible.
Reach out to us to discuss your property portfolio.