UK Rent Surge Hits Record High in January 2024

Runaway private rents have risen the fastest since records started in January 2016.

Data from the Office for National Statistics says tenants paid 6.2 per cent more rent in January than a year earlier and that the rate of increase has remained unchanged since November last year.

Rent rises also hit a record 6.9 per cent in the 12 months to January 2024 - the peak since tracking rents in the capital began in January 2006.

The lowest regional rise was in the North East, where rents climbed 4.7 per cent in the past year.

Tenants in Wales also pay higher rents, surging by 7 per cent from 12 months to January. Although the rise is the highest national rise across the UK, the figure still shows a 0.3 per cent fall from the record high of 7.3 per cent in November.

The ONS publishes data showing how rents have changed in the year to January 2024 by region:

Growing demand for scarce homes to rent

The Royal Institution of Chartered Surveyors (RICS) reports that tenant demand grows as fewer buy-to-let homes come to market. RICS forecasts the lack of properties will push rents even higher across the coming months.

According to the Homelet Rent Index published by one of the UK’s largest rent reference agencies, the average private rent fell 0.6 per cent to £1,260 monthly. However, rents still posted a 7.5 per cent increase from 12 months to January.

The report says rents dropped in every region except the East Midlands, West Midlands and the South West.

At £655 a month, the North-East remains the cheapest region for renting a home.

Homelet CEO Andy Halstead said: “Marginally lower rents put slightly more money in tenants’ pockets and partially reduce the likelihood of defaults, but the broader landscape is still incredibly challenging for all parties - with little sign of easing. In fact, following last year’s trajectory, it is entirely possible that rents could be 5-10 per cent higher by this time next year.

“Unless we see some dramatic changes to the economy, 2024 looks set to bring more of the same. Landlords will have to battle a familiar array of struggles, including rising costs and prohibitively expensive buy-to-let mortgage rates.”

Squeezing tenant finances

Letting agent Hamptons argues tenant bank accounts have been squeezed to the limit by two years of the rising cost of living and landlords passing off mortgage rate increases as rent rises, with the result that most cannot afford rents to climb higher.

The firm’s data shows a national 8.3 per cent rent rise in the year to January - the lowest figure in 13 months.

Hamptons explained slowing rents means fewer landlords can demand a higher price for their homes to let. Some 59 per cent achieved a higher rent when re-letting in January 2024, compared with 79 per cent a year earlier and 81 per cent in January 2022.

Aneisha Beveridge, Hampton’s head of research, said: “While the upward pressure on rents seems set to weaken in 2024, particularly since mortgage rates have come down, wider pressures on landlords mean rental growth will remain stubbornly sticky.

“Reduced returns coupled with the additional time and financial costs stemming from rental reform have squeezed the numbers of new landlords. This looks set to keep rental growth running ahead of inflation this year.”

Buy-to-let rents FAQ

Why do rent indices show different results?

Check the data carefully. The various indices cover different periods and the demographics of the samples vary between reports.

The Office for National Statistics (ONS) has the most extensive sample, so it should return the most reliable figures. However, the time to collect and analyse the statistics often means the ONS data lags a month behind the rest of the sector.

PropertyMark, formerly the Association of Residential Letting Agents (ARLA), derives insights from letting agents and provides a sentiment survey rather than measurable data.

Homelet statistics come from customer data, which may only partially reflect the market.

The ONS points out their index is based on rents achieved rather than rents advertised.

Should landlords raise rents in line with the stats?

Fixing rents is a business decision for landlords. Rent statistics indicate how the market moves but do not reflect demand from tenants and property standards in local neighbourhoods.

Remember 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 only good if you 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 will likely indicate better where a landlord should pitch a competitive rent and stop them from under or over-selling.