The Real Value of a Spare Room in the UK
Covid-19 has ravaged many aspects of the UK’s landscape in the past 12 months, not least on an economic front. Businesses have folded, jobs have been lost and industry blighted as the microscopic infiltrated the workplace, and the market place.
However, while some employees take some comfort from the government’s furlough scheme and wait patiently for the R number to recede, the potential income that can be accrued from letting a spare room has never been so important.
The Office for National Statistics (ONS) has extensive and encouraging data for anyone looking to boost their income regarding the real value of a Spare Room in the UK and casting an eye over their research can be invaluable for both tenant and landlord. The statistics highlighted in this article are based on a sample of 502,780 private rental data in the Valuation Office Agency (VOA) lettings information database, collected by Rent Officers from landlords and letting agents, so are gold in interpreting the spare room market
‘Spare Rooms come in different shapes and sizes’
Spare Rooms obviously come in a variety of shapes and sizes, from the simple bedroom, to a studio flat ,or up to four roomed premises and the ONS, have collated extensive data on their relative value in six individual bedroom categories.
Between April 2019 and March 2020, the median monthly basic spare room rent in England as a whole was £400, rising to £700 for a property with four or more bedrooms and falling to £500 per month for studio flats.
‘Regional disparities for spare room values’
While the ONS have reported these meridian figures for letting your spare room, the regional disparities were unsurprisingly marked, with London recording the highest average of £1,425 per month, across all bedroom categories, compared to the North West which had the lowest at £495.
The observed disparity follows a traditional North/South divide following a characteristic economic pattern in the UK, with spare rooms in London higher by an impressive margin over even other areas of the South-East.
‘Property rentals in the Capital out price the South East’
The ONS reports that the median monthly rent for a property in London was £525 higher than the next largest median monthly rent of £900 in the South East, with Inner London achieving an average of £1700 compared to £1295 for Outer London. However, the range of prices and rents were broader in these ONS figures than anywhere
else in the country due to the huge range of property types in the housing stock in the capital.
Rental distribution across local authorities
In this report the ONS focused not only on the cost of renting to private tenants across geographic regions of the UK, but also across local authorities. These figures were illuminating, but unsurprisingly were a clear reflection of the bigger national picture.
Westminster recorded the highest median monthly rent of £2,492 while the lowest was in Kingston Upon Hull (Yorkshire & The Humber), with an extraordinary gap in monthly rental average of £2,100 at £420.
Covid boosts Spare Room market South West
At this point it is interesting to note that the ONS reported a growth of between 1.4% and 1.5% up to March 2020 in the private rental sector, but in the subsequent year to January 2021 there was a fall to1.3%.
Of course, this statistic is a phenomena of a Covid-19 economy, which is also seen as responsible for the fact that The South West and the East Midlands were the English regions to see the highest annual growth in private rental prices (both 2.2%), while London saw the lowest (0.8%).
As Covid has reduced our individual freedoms, access to more rural communities has become more attractive to many. Quarantine or lockdown in a green space has been far more preferable than for those who have felt trapped in an urban high rise and the private rental market has reflected this trend as well. The South West saw a rise of 2.2%, while London fell to 0.8%.
Private rental markets favour less urban environments
Across the four nations of the UK, there has been a clear upsurge in the private rental market, from 2015 to 2021, however rental prices for spare rooms have increased more in England and Northern Ireland than for Scotland and Wales.
In conclusion, it is clear from the ONS data from 2019 to the current time, that while the market for spare rooms is still expanding across the UK, from studios to four-bedroomed dwellings, the nature of that expansion has moved towards areas that are less population dense, which is a novel experience.
Whether this trend is one which will continue, as the vaccination programme is rolled out, is unclear. Lockdown may be a thing of the past in the coming year, but many are speculating as to whether the new normal will see patterns of behaviour changed for the long term.
Working from home, once an unusual occurrence, may become an attractive proposition for many going forward, and with the technical and digital know-how increased in the past year, choice of residence may not simply be a question of geography.
Spare room market beats Covid
Spare rooms across the UK have certainly not floundered, either in their availability or in their market value in the last year, although private landlords in the South West may find they have a broader range of tenants to choose from. Inevitably, on the same trajectory, those renters seeking an urban environment may find themselves pleasantly surprised by
a less intimidating annual rise.
Whether you are looking to rent out your spare room or mansion, or be a tenant in either situation, demand is currently meeting supply and outrunning the microscopic changes of Covid-19 that have dominated the economy for the last 12 months and there is little reason that this will change.