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UK rents increased by 0.7% month on month in October to £1,294, showing no signs of the seasonal slowdown that normally hits the UK rental market in the autumn, according to the latest index.

Rents increased across most of the county with the only exception being Scotland which saw a marginal monthly fall of 0.1% to £696, the data from the Landbay Rental Index shows.
 
The report suggest that the latest rises indicate that the UK’s housing shortage combined with growing pay for many and unemployment levels hitting their lowest level since 2008 have put an end, at least for the time being, to the usual seasonal fall in rents that starts in the autumn.
 
In fact the last time there was a sustained period of falling rents was in the winter of 2012/2013, when rents saw monthly falls from August 2012 to April 2013. Rents increased every month in 2014 and have been strong this year, seeing only small month on month decreases between June and August before increasing again in September and October.
 
Typically an autumn seasonal slowdown in the rental market is caused by lower tenant demand after heightened demand in the summer from students, first jobbers moving for work, and the expiry of annual contracts that originated in previous summer rental rushes.
 
The fact that it did not happen last year and shows no signs of arriving this year demonstrates that the UK private rental sector is seeing a period of consistently high demand and insufficient supply of properties.
 
October’s rent increases were fastest for three bed properties, which are often rented by families moving for work, up 4.7% year on year and one beds that are most popular with first jobbers and young professionals, up 4.4%.

Increases in the UK are being driven by London and the southeast. In October London rents increased by 4.1% to an average of £2,063, whilst rents in the southeast rose by 3.4% to £1,033.

The impact of London on the national private rental sector is becoming increasingly evident by the surge in rents among commuter hotspots. Southend on Sea, historically not well known for its commuter town status, has seen consistently faster growth in rents than the national average. The seaside town’s one hour direct train into London and recent gentrification have played their parts in an annual rental increase of 9.7%, to an average of £759 per calendar month.
 
Out of the top 20 areas of the UK outside of London to see the fastest rent increases, just Aberdeen, Edinburgh and Bath were outside of the southeast.

‘Seasonality has always been a strong feature of the UK’s rental market so the fact that it appears to be declining in influence is a powerful sign of the increasing strain the private rental sector is under to house the UK population,’ said John Goodall, chief executive officer of Landbay.

‘The simple fact is that more people are renting for longer and there aren’t enough properties to meet demand. Now that the economy is improving and wages are rising, people are willing to compete for rental properties, pushing up prices. In previous years, price conscious tenants could take advantage of the seasonal dip in rents to find cheaper rents in the autumn or winter. Consistent rent rises throughout the year has taken away that option in large parts of the country,’ he explained.
 
‘The almost uninterrupted monthly rental increases we have seen since spring 2013 show that residential property is a resilient asset class that has performed exceptionally well during a period of low inflation,’ he added.

According to Joe Macklin, director at MIAC which powers the index, for the seasonal adjustments to show up as expected in the trends, the fall in supply must be outweighed by the fall demand to result in a drop in rental prices.

‘The underlying data suggests that October is the first month in the run up to Christmas where there is a notable fall in supply, however, prices show little sign of falls so the demand must be remaining buoyant and hence we currently see no seasonal variation. This arguably emphasises the high degree of undersupply in housing stock,’ he pointed out.