UK rents continue rising as London leads the surge – ONS

Private rent prices paid by tenants in the UK have continued growing and have risen by 5.5% in the year to August 2023, data from the Office for National Statistics (ONS) reveals.

This is up from 5.3% in the year to July 2023, and reflects the strong demand for rental accommodation amid the ongoing housing crisis.

The annual increase in rents sees tenants in England paying 5.4% more for a new tenancy, in Wales it is 6.5% and in Scotland it is 6%.

In England, London had the highest annual percentage change in rent prices at 5.9% – that’s the highest figure since January 2006 when the ONS began collecting data.

The North East and South West saw the lowest rate of rent increases at 4.8%.

‘Rental figures reflect what we’ve been seeing’

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, said: “These more timely rental figures reflect what we’ve been seeing on the ground – that shortage of stock is continuing the upwards pressure on rents at a time when students are adding to tenant numbers.

“The burden of higher mortgage rates as well as tax and regulatory issues are persuading landlords to quit the sector which is not helping keep rents in affordable territory.”

He added: “However, we have noticed the difference between the rents charged on new tenancies and those who are renewing existing arrangements as tenants are reaching an affordability ceiling.

“Landlords recognise the importance of reliable, long-term tenants rather than maximising their returns unless, of course, their costs are getting out of hand.”

‘Increase in private rents is no surprise’

Anna Clare Harper, the chief executive of sustainable investment adviser GreenResi, said: “This increase in private rents is no surprise in the context of public policy.

“For some years, housing policy has focused on the needs of homeowners, on debt to fund new supply, and on increasingly stringent regulations designed to make the private rental sector more professional.

“The cost and challenges of complying with regulations, in combination with higher interest rates, are triggering a landlord exodus.

“We have seen a five-fold increase in the volume of traditional landlord properties on auction catalogues this month compared with last year.”

She adds: “So what next? As landlords exit en masse, even less rental housing will be available, and we can expect even greater rent price increases.

“The solution is not further regulation or rent caps, but encouragement to professional investors to recapitalise the private rental sector and take the place of traditional side-line landlords as happens in countries with thriving rental markets, such as Germany.”

‘In the grips of stock-deprived market’

Harriet Scanlan, the lettings manager at Richmond estate agency Antony Roberts, said: “We are still very much in the grips of a stock-deprived market.

“Just this week we launched two new rental properties which both attracted multiple offers and subsequently exceeded the asking price.

“There is plenty of evidence like this which clearly demonstrates how lack of supply combined with high demand affects the rents achieved.”

She added: “One of the primary drivers for private landlords exiting the buy to let sector are changes in tax regulations, primarily the reduction of mortgage tax relief.

“In recent months, the interest rate hikes have also had a direct hit on some landlords’ profit margins.

“However, those landlords who are able to hold their nerve are being rewarded with minimal-to-no void periods and escalating rental prices.”

Share This Article