UK rents reached a record high in January

Private rents in the UK reached record highs in January with the average rent paid by tenants rising by 6.2%.

That’s according to the latest report from the Office for National Statistics (ONS) and its rental index reveals this is the joint-highest since January 2016.

The ONS said that the rise in private rents was driven by strong demand and limited home supply, especially in London, where rents increased by 6.9% in the year to January – the joint-highest since January 2006.

Wales saw the largest annual rent increase

Tenants in Wales saw the largest annual rent increase of 7.0%, followed by Scotland at 6.8% and England at 6.1%.

Within England, the North East had the lowest annual increase of 4.7%, while London had the highest.

London rents accounted for almost a third of UK rental expenditure, the ONS said.

Private rents in Northern Ireland rose by 9.5% in the year to November 2023, the latest available data, the highest among all UK countries.

However, Scotland’s rents grew by 6.8% in the 12 months to January, up from 6.3% in the 12 months to December 2023 – the highest annual rate since January 2012.

The ONS report notes that the Cost of Living (Tenant Protection) Scotland Act, which capped in-tenancy rent increases in Scotland since late 2022, has had an impact on the Scottish rental market.

‘Average rents paid by tenants in the UK’

Anna Clare Harper, the chief executive of sustainable investment adviser GreenResi, said: “Average rents paid by tenants in the UK rose by 6.2% in the year to January 2024, more than 50% above inflation which is 4%.

“Even then, this statistic underestimates the reality faced by renters. For the one in four renters who move each year, rental price increases are often twice as high on starting a new tenancy.”

She added: “The real problem is not rent price increases but affordability.

“The government’s own metric for this is that to be affordable, rents must be below 30% of household income.”

‘Further growth is unsustainable as a percentage of income’

Ms Harper continued: “Many believe that London rents will soon reach the point where further growth is unsustainable as a percentage of income.

“Meanwhile, rent rises continue at pace outside London, albeit from a lower starting point.

“Worse still, affordability is just one of the problems facing Generation Rent.

“There are not enough homes – rental supply is down 28% in the past 18 months.

“And the quality of rental homes is inadequate: 23% of private rental sector homes fail to meet the Decent Homes Standard.”

‘Noticed a closer alignment of supply and demand’

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “On the ground, we’ve noticed a closer alignment of supply and demand which is helping keep rents in check.

“Lower-than-expected inflation is also helping so the stabilisation in rents shown in these comprehensive figures is not surprising.”

He added: “Looking forward, we expect more properties to come onto the market taking into account the number of recent valuations which will go some way to meeting the seemingly inexorable rise in appetite for accommodation.”

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