August saw the UK rental market continue to feel the pressure as average rents remained above £1,400 for the second consecutive month, according to the Goodlord Rental Index. Although slightly down from July’s record high of £1,470, the average rent in August was still a substantial £1,438, reflecting a nearly 7% increase year-on-year.
Year-on-year rent hikes continue to squeeze tenants
The cost of renting a home in England rose by 7% in August compared to the same period last year. In August 2023, the average rent was £1,347, but this has now surged to £1,438—a £91 per month increase. The South West saw the most significant year-on-year rise, with rents climbing by 13%, closely followed by the East Midlands and North East, both experiencing increases of over 9%. Conversely, the West Midlands and Greater London reported more modest increases, with rent hikes of just 2-3%.
August rent dip follows July surge
Despite the year-on-year growth, August saw a slight 2% dip in average rents compared to July, reflecting a similar pattern observed in 2023 when rents fell by 1.5% between these two months. Nevertheless, August 2024 marked only the second time on record that rents have stayed above the £1,400 mark.
Regionally, the picture was mixed. The East Midlands, Greater London, South East, and West Midlands all saw rent increases, while the North East, North West, and South West experienced reductions. Notably, the North West, which had seen a record-breaking rent increase in July, faced a dramatic 23% drop in August, with average rents falling from £1,451 to £1,117.
Void periods and tenant incomes under pressure
Void periods—the time a property remains vacant between lettings—lengthened across most regions in August, increasing from an average of 11 days in July to 15 days in August, a 36% rise. This is slightly longer than the 13-day average recorded in August 2023. The only region to buck this trend was Greater London, where void periods shortened from 13 to 12 days.
Tenant incomes also took a hit in August, with the average salary for new tenants dropping from £38,086 in July to £36,719 in August—a 3.6% decline. Over the past year, tenant incomes have risen by just 0.86%, far below the 7% increase in rents.
William Reeve, CEO of Goodlord, commented on the findings: “Rental cost figures from the last two months closely mirror the trends we saw in 2023; a big surge upwards in July, with August figures dipping slightly but staying very high overall. Rents are now up 7% year-on-year, but salaries have only recorded a 1% uplift across the same time period: this is really putting the squeeze on tenants.”
Reeve also noted the potential for rents to hit a “sustainability ceiling,” warning that if prices continue to rise, they could become unaffordable for many tenants, exacerbating the ongoing housing crisis. As interest rates begin to drop, the balance between rent increases and tenant incomes could dictate the next phase of the rental market.
