The latest research by Zero Deposit reveals that tenant demand is fostering strong rental growth across all property types, highlighting the need for a diverse rental market. This trend is evident despite regional variations in rental price increases.
Regional variations in rental price growth
Zero Deposit’s analysis of the latest rental price data from the Office for National Statistics shows that the average rent across Britain has risen by 9.1% over the past year. While London and Scotland have seen double-digit growth rates of 11.2% and 10.5% respectively, the North East has experienced a more modest increase of 6.1%.
London and Scotland lead in annual rental market growth for most property types, with the West Midlands also showing strong growth, particularly for semi-detached homes, which have seen a 9.7% annual increase.
Growth across property types
When examining rental growth by property type within each region, the analysis shows a more balanced picture. Across Britain, detached properties have seen an 8.6% increase in average rental prices, semi-detached homes are up 8.7%, terraced homes have grown by 8.5%, and flats have the highest growth at 9.9%. This results in just a 1.4% difference between the lowest and highest growth rates.
At the regional level, the gap narrows even further to 0.8% or less in all regions except Scotland. In Scotland, detached home rents have surged by 12.9% annually, while terraced homes have increased by 9.5%, marking a 3.3% difference. Conversely, the North West and East of England exhibit the most even rental markets, with only a 0.5% difference in rental price growth between property types.
Demand for diverse rental properties
Sam Reynolds, CEO of Zero Deposit, commented on the findings: “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. 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.”
Adapting to changing rental needs
The research underscores the importance of a diverse rental market that can adapt to the evolving needs of tenants. As lifestyle changes influence rental preferences, maintaining a variety of property types is crucial to meeting demand. The balanced growth across property types highlights the dynamic nature of the rental market and the necessity for ongoing adaptation to ensure it meets the needs of all renters.
