Rents Rise at the Fastest Rate for 14 Years
According to the latest official data for July 2022, rents have been growing fastest for 14 years.
The Office for National Statistics (ONS) says year-on-year rents in England increased by 3.4 per cent - a growth rate last seen in November 2008.
Wales lags the English figures, rising 2.5 per cent in the year to August.
At a regional level, the East Midlands posted the most significant annual rental price increase of 4.5%, while London saw the lowest (2.5%) up from 2.1% in July. The figures mark the most substantial annual growth in London since October 2016, but the capital's rent growth is the lowest in English regions.
Pent-up demand from tenants
Despite the rising cost of living, property professionals are optimistic that rents will continue to rise as demand from tenants far exceeds the number of homes available to rent.
International property consultancy Knight Frank observed that more people were taking foreign holidays this year due to the easing of pandemic travel rules. The exodus abroad has seen viewings fall by 16 per cent.
“There is still strong demand in the pipeline and the number of active buyers in the 12 months to August was unchanged from last year,” said a spokesman.
The average UK rent paid by tenants has reached £1,143 a month - a 1.4 per cent rise on last month, says research from tenant referencing agency Homelet. Rents in London are even higher, averaging £1,898 a month - up 1.6 per cent from July.
Rents to keep rising
Excluding London from the figures, UK rents have risen by 7.7 per cent in a year to an average of £961 a month.
HomeLet CEO Andy Halstead said: “Costs of all kinds are rising, directly impacting landlords and their tenants. Factors like increasing mortgage interest rates, changes in taxation, and bills for improvements to meet new government energy efficiency standards are growing pressures on landlords.
“With high demand, tenants’ affordability constraints will start to be stretched. The value letting agents can provide to both tenants and landlords is only increasing in the current market. High-quality tenant checks and relevant insurance have become essential considerations for landlords.
“We expect rental prices for new tenancies will continue to increase. It’s a challenging position for both landlords and tenants. Whilst landlords’ cost bases are being squeezed, tenants’ living costs are only getting worse.”
Meanwhile, property portal Zoopla reckons a trend of tenants downsizing homes to save living costs is on the way.
Richard Donnell, the portal’s executive director, said: “Rents have surged ahead over the last year, but there are signs that the pace of growth is peaking and set to slow into 2023. Renters are responding and looking for smaller, better value for money homes to rent with an eye on energy costs as much as rental levels.”
How rents have changed where you are
|Region||Aug-22||Aug-21||Annual Change||Jul-22||Monthly Change|
|Yorkshire & Humberside||£778||£724||7.50%||£778||1.20%|
|East of England||£1,091||£1,021||6.90%||£1,091||0.90%|
|UK excluding London||£961||£892||7.70%||£948||1.40%|
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. Other 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.
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