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Rents rising fastest on larger properties: Hamptons

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Rents on larger properties are rising at a faster pace than smaller homes, according to the latest housing index from Hamptons.

Rents on four-bedroom properties are showing the strongest growth having increased by 10.6 per cent over the year to October. This gives an average rental cost of £1,949 per calendar month. This is three times the rate of growth seen for one-bedroom properties, where rents have increased just 3.7 per cent year-on-year, to £875 pcm, according to Hamptons’ monthly letting index.

The estate and letting agent said the shift towards working from home as a result of Covid had fuelled demand for more living space and larger properties. As a result the cost of trading up to gain this additional space had substantially increased.

The gap between the monthly rent of a one and two-bed home now stands at its widest point since 2013, when Hamptons starting compiling this index, with the monthly cost of renting a one bed property now equivalent to the cost of renting a two-bed property in 2016.

In total, the cost of trading up from a one-bed to a two-bed rental property has doubled over the last three years. Last month it cost £144 or 16 per cent more to rent a two-bed home, more than double the gap (£68 or 8 per cent) recorded in October 2018.

This equates to an extra £1,728 each year on average in rental payments. The cost of moving from a two-bed to a three-bed has also risen.

London is the costliest region in the country to trade up, both in absolute and percentage terms. Last month the average two-bed in the capital cost £567 or 42 per cent more each month than a one-bed. The North East is the cheapest region to swap a one-bed for a two-bed, where it will cost an extra £102 a month, equivalent to a 20 per cent increase.

Compared to last year, the cost of trading up has risen the most in the East Midlands. Here it cost 12 per cent or £63 more each month to trade a one-bed for a two-bed home than in October 2020. This is because rents on one-bed properties in the region have fallen by 0.2 per cent year-on-year, while two-bed rents have risen by 9.7 per cent.

London is the only region where it’s cheaper to trade up than it was last year. This is because rents on one-bed properties in the capital have risen faster than two-beds. Much of the demand for one-bed homes in London has been driven by younger tenants and pied-à-terre hunters returning to the capital, which in turn has bolstered rents.

Hamptons head of research Aneisha Beveridge says: “The pandemic has marked the first time that we’ve seen such a big divergence in rental growth by property size.

“Usually, rental growth remains fairly uniform no matter how large the home is, but over the last year the gap between rental growth on smaller and larger properties has widened to around 5 per cent. But as more tenants make their return to city centres, many seeking smaller properties, it’s likely that the gap will begin to shrink in the new year.

“There are few signs that rental growth is slowing as the year ends meaning that if growth continues at current rates, we are likely to see rents outside the capital hit £1,000 per month by the middle of next year.

“Rents in London are starting to recover their pre-pandemic momentum which will serve to bump up the headline rental growth figure nationally.”

Finopulse

Disclaimer: This story is auto-aggregated by a computer program and has not been created or edited by Finopulse.
Publisher: Emma Simon

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