Rents Rising at Fastest Rate for Six Years
The cost of renting is still rising despite the cost-of-living crisis squeezing tenant budgets.
Rents were up 2.8 per cent in the year ending May 31 (2022) - the most significant increase in the six years since the Office for National Statistics started keeping records and 0.2 per cent up from figures for the year to April.
The ONS says rents have become more expensive across the country, except in London in recent months.
Although rents and property prices are higher in the capital, tenant demand has decreased since the coronavirus pandemic forced more people to work remotely - and this shift is reflected in the cost of rents.
The latest ONS Index of Private Housing Rental Prices for May says:
“In the 12 months to May 2022, rental prices for the UK, excluding London, increased by 3.4 per cent, up from an increase of 3.3 per cent in April 2022. London private rental prices increased by 1.5 per cent in the 12 months to May 2022, up from a rise of 1.1 per cent in April 2022.
Strong demand from tenants
“This is the strongest annual growth in London since July 2017. Despite this, London’s rental price growth in May 2022 remains the lowest of any of the English regions.”
The data shows although UK rents increased by 2.8 per cent, excluding London, tenants living elsewhere paid 3.4 per cent more while those in London paid 1.5 per cent.
Rents are likely to increase, say the Royal Institution of Chartered Surveyors (RICS) and ARLA Propertymark, the trade body for letting agents. Both bodies agree tenant demand is strong, although ARLA observes new instructions from landlords are falling.
Overall, private rents have increased by 13.5 per cent since January 2015, says the ONS.
Buy to let rents by region
For the second month running, the East Midlands saw the highest annual rent growth; more than half the English regions saw rents rise by 3 per cent or more, and every part posted a rise of 2.5 per cent or more except the capital.
Average rent hits £1,100 a month
Average rents are now £1,103 a month - up 10.6 per cent compared with the same time last year, according to tenant reference service Homelet.
At an average of £1,832 a month, London has the highest rents, up 15.7 per cent in the year to May.
“With continued universal pressure on households, we’re seeing tenants stay in properties for more extended periods. However, as summer approaches, we expect tenants to move at a much higher rate which means average rents for new tenancy agreements will continue on an upward trajectory,” said a Homelet spokesman.
“The rental market plays a critical role in satisfying the UK’s housing needs, and the long-awaited Renters’ Reform Bill needs to strike the right balance by protecting tenants and landlords. With many landlords already exiting the market, the government’s commitment to legislation will provide the most significant change to rental law in a generation. It shouldn’t risk marginalising landlords even further.
“Whilst managing agents can provide a vital service to landlords as the market becomes more complex, there’s a genuine risk that we will continue to see a decline in the number of landlords in the UK. Ultimately, tenants will foot the bill if the level of stock decreases and demand grows, as we saw with the 2019 Tenant Fees Act.”
How rents have changed where you are
|Region||May-22||May-21||Yearly change||Apr-22||Monthly change|
|Yorkshire & Humberside||£757||£697||8.60%||£749||1.10%|
|East of England||£1,062||£1,001||6.10%||£1,055||0.70%|
|UK excluding Greater London||£928||£854||8.70%||£910||0.90%|
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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View Related Handbook Page
The landlord and tenant should mutually agree on the initial rent. During the first six months of a tenancy, tenants can refer the rent to the First-tier Tribunal (Property Chamber - Residential Property) for review if they consider the rent above the market rent. This is, however, very rarely done.
Investing in a private rented property can be achieved in a variety of ways. Sometimes landlords inherit a property that they then turn over to renting. Sometimes owners of properties become unintentional landlords because they are unable or unwilling to sell a property at the value the market currently dictates.