New tenancies are now almost back to pre-pandemic levels

The number of new tenancies is almost back to pre-pandemic levels following a sharp decline in activity during the second quarter of the year, according to The Deposit Protection Service (The DPS).  

The volume of tenants moving during Q2 2020 dropped by almost a third - 32% - with new tenancies registered with The DPS falling from just under 60,000 in March to just over 32,000 in April. But June saw a swift recovery of just under 56,000 registrations as lockdown measures eased, said the organisation.

Matt Trevett, managing director at The DPS, commented: “Although the number one priority for the rental industry over the last few months has been to safeguard public health, it’s clear that the restrictions affecting letting agents, landlords and tenants led to a significant reduction in home moves.

“Nevertheless, now lockdown is easing new lets are increasing, and we expect the trend of tenancy moves to continue back to pre-pandemic levels over the summer.”

The DPS report shows that tenants paid on average £782 per month during Q2 2020, an increase of £7, or 0.9% on Q1 2020 and £12, or 1.56%, more than Q2 2019.

London remains the most expensive place in the UK to rent with monthly average rents in the city static at £1,345 for the past three consecutive quarters, the DPS said.

Excluding London, average monthly rents across the UK during Q2 2020 were £99 lower than the average, at £683 per calendar month (pcm).

Most regions experienced average rent increases during Q2 2020, except for the South East, Scotland and the West Midlands, which experienced falls of £9 (-1.01%), £4 (-0.62%) and £2 (-0.32%) respectively.

Rents in the North East, the cheapest place in the UK to rent, rose by £7 (1.35%) during Q2 2020, to £524pcm.

Rents rose across all property types during Q2 2020, with terraced property rents increasing the most, rising £14 (1.93%) from £725 in Q1 2020 to £739 in Q2 2020.

Inflation fell from 1.70% to 0.65% during Q2 2020, while national average salaries were £30,353, with UK renters typically spending 31.16% of their income on rent.

The DPS said its Q2 2020 rent affordability calculations do not reflect the fact that many tenants receiving income under the government’s furlough scheme will be paying a comparatively higher percentage of a reduced salary on rent.

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