London Rents Rise Slower Than Rest Of UK

While house prices have seen a stamp duty holiday bonanza, rents have hardly increased to August 2021. Data from the ONS shows rents are rising – but have stubbornly stuck at the same level since the start of the year.

How rents have moved in the past year

ONS data for the past year shows that average UK rents have hardly changed.

Rent increases by country – July 2012 to July 2021

Rents are growing the fastest in Northern Ireland – which has seen them rise by 3.4 per cent in a year. The figures by country for the year ending July 2021 are:

• England, including London: Rents up 1.2 per cent yearly and 0.1 per cent since July
• England excluding London:  Rents up 2.1 per cent
• Wales: Rents rose 1.2 per cent, up 0.1 per cent from July
• Scotland: Rents up 1.6 per cent year on year, up 0.3 per cent from July

Rents by region in England

The East Midlands just tipped the South West, with rents growing fastest in August. The year-on-year rise in the East Midlands hit 2.7 per cent compared with 2.6 per cent for the South West. London posted the worst figures – a 0.4 per cent drop in rents -  and was the only region in negative territory. 

Average rents climb to £1,053 a month

Homelet says rents are rising the slowest in London and the South East, which increased 3.6 per cent and 5.8 per cent in the past 12 months, respectively. Meanwhile, rents in the South West saw an 11.9 per cent increase and were up by 10.7 per cent in the East Midlands.

Homelet's head of business intelligence Rob Wishart said: "Typically, rents for new tenancies will rise in line with the rate of inflation, but that hasn't happened in the past few months. Demand for housing and certain property types outstripped supply in many areas, causing upward pressure on rental prices. We can expect the increase in rents to continue for the foreseeable future. 

"We may see London accelerate at a faster rate than the rest of the country in the coming months, as international travel ramps up and rates of working from home move in the opposite direction."

The average rent in the UK hit a new record high of more than £1,000 for the third month. Average UK rents are £1,053 a month, while London rents are also breaking records. Landlords in the capital now charge an average of £1,713 a month.

Guild of Landlords Rent Digest – FAQ

For landlords confused by the stats and what they mean, here are answers to the most asked questions about rents.

Why do the rent indices show different results?

Check the data carefully. Different indices cover different periods, and the samples vary between reports. The ONS has the most extensive sample, so the most reliable figures should return, but the time to collect and analyse the statistics often means the ONS data lags behind the rest of the sector. ARLA derives insights from letting agents and provides what's known in the trade as a sentiment survey rather than factual data. Homelet statistics come from customer data, which may not fully reflect the market.

Should landlords raise rents in line with the stats?

That's a business decision for landlords. The rent statistics indicate how the market moves but do not reflect demand from tenants and property standards in local neighbourhoods. Don't forget that the data is historical, showing what's happened rather than what will happen.

Which rent index is the best?

That's up to individual landlords. For instance, one index with a solid customer base in the same area as a landlord's portfolio may align more closely with market rents for that neighbourhood. Average data is not good if you don't have an average home, and median rents will cover everything from a room in a shared house to a four-bedroom home. Extra research with local letting agents is likely to indicate better where a landlord should pitch a competitive rent and stop them from underselling.

How has coronavirus disrupted the statistics?

Although several letting agents and property organisations publish regular rent statistics, many have been affected by the coronavirus lockdown that has their reports suspended or delayed.