Modest drop in rental costs heralds busy start to the year

The average cost of rent fell slightly during December, dropping 1.47% to £1,071, according to the latest Rental Index from Goodlord.

The South West saw the largest reduction of 2.68% to £1,066 while the only region to see an increase was the North East, where prices moved up 1.36% to £800. Average rental costs are now at their lowest since June 2022, however, the year ended with rents up by 8.7% across England compared with 2021. 

Highest prices

The highest rental prices were found in Greater London (£1,796) and the lowest in the North East (£810), the same regional split as Goodlord recorded in 2021.

It reports that the average void period remained unchanged at 20 days during last month as tenant demand continues to come up against lack of stock. The most significant shift was seen in the South West, with a 8.7% decrease, followed by the East Midlands, which experienced a drop of 8%. Greater London had the highest percentage increase in voids up from 12 days to 13 days – a jump of 8.3%. This was followed by the South East, which saw a 5.6% rise in voids, and the West Midlands, with a 4.8% increase. 

Incomes rise

Meanwhile, tenants’ average income fell 2.4% to £30,346 in December, although there was an average 11.1% increase across all regions during 2022. With rental costs rising by 8.7% during the same period, the average increase in tenant incomes outstripped the pace of rent rises.  

Goodlord COO Tom Mundy says: “We always expect to see a dip in activity and a drop in rental averages during November and December, so the steadiness of voids and the very marginal shift in rental costs this month mean we’re likely to see a very brisk pace across the lettings market in the early months of 2023.”