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The great north/south property divide: is it getting worse?

In January 2008 it was 37% more expensive to rent a property in Greater London, the South East or the South West of England compared to the rest of the UK. According to new research, the average cost of renting in the South is now 69% more expensive than the North.

The January 2014 HomeLet rental index showed that the average cost of rent was 2.4% higher in January 2014 than the year before but had actually decreased by 1.4% on a monthly basis compared to December 2014.

Gary Abraham, HomeLet’s sales and marketing director, said: “With UK home sales at the highest for six years (according to recent figures released by RICs) we might expect tenant demand for property in the private rented sector to drop in 2014, as they potentially begin moving in to owner occupied accommodation.

“Our latest data certainly shows that the rate at which rental values are increasing has slowed down following the rapid growth we saw immediately after the 2008 housing crisis. However, whilst more people are buying, a reported increase in house prices means that buying remains unaffordable for many, particularly in the capital, and some would-be-buyers may worry about the prospect of factors like negative equity or large deposits.

“A lack of affordable housing stock in the south could be one of the drivers for the growing divide we’re seeing between rental values in the North and the South. Our data shows that the difference in cost between renting a home in the South compared to the North has increased for the sixth consecutive year.”

The average UK rental from November 2013 to January 2014 is £806 per month when the figures for the Greater London area are included. This was a 3.3% increase on the same period as last year. When Greater London is removed, the average rent drops to £670.

It’s easy to see the North/South divide in the rental figures but there is also a London divide- according to the index, it is currently 88.4% more expensive to rent a home in the capital than the rest of the UK and 51.7% more expensive to rent in London compared to in the South East and 68% more than the South West.

The index also gave the average rent amounts for January 2014 and the percentage change from December 2013 and January 2014.

The largest monthly variances came from the North West which saw the largest negative change with a -7.4% drop in average rent. The largest monthly increase came from Northern Ireland with an increase of 5.4%.

Looking at the annual figures, the biggest increase was seen in East Anglia who saw rental prices increase 8.2% between January 2013 and January 2014. This largest decrease was seen in the South West region which experienced a -4.8% change in rental prices.

How did the North East perform?

January 2014 Average Rent Amount £505

December 2013 Average Rent Amount £501

Monthly Variance +0.8%

January 2013 £511

Annual Variance Average Rent Amount -1.2%

These figures take the whole North East region into account to give the average but as the capital of the North East, the figures in Newcastle can be very different. Even though the housing market is starting to recover and more opportunities are available for people to get on the property ladder, many are still struggling and as a result we are seeing rents increase in the most popular areas of the city. This may not be as high as London and other parts of the country, but the demand for rental accommodation in Newcastle City Centre and close surrounding areas is strong. There are a lot of students, graduates and young professionals in the area, which means there is a constant demand for rental property, and even a shortage of properties in certain areas at different times of year. Newcastle has the highest graduate retention rate outside of London, so the need for rental accommodation remains robust.

This was posted in Bdaily's Members' News section by Walton Robinson .