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A lack of homes to rent is pushing up living costs for tenants nationwide, claim letting professionals.
Rents started to rise in the autumn of 2021 and have continued to surge upwards across all regions outside London, says the Office for National Statistics (ONS).
However, in the year to the end of May 2023, tenants in the capital were hit with the most significant percentage increase in rents since September 2012.
This was followed within a month by rents in London rocketing by 5.3 per cent in the year until the end of June.
The rise was terrible news for private tenants as London accounts for almost a third of total UK rent collected by landlords.
The ONS also confirmed UK buy-to-let rents grew by 5.1 per cent between July 2022 and the end of June.
The ONS findings were echoed by the Royal Institution of Chartered Surveyors (RICS) and the Association of Residential Letting Agents (ARLA).
Both professional trade bodies agree buy-to-let availability is low while tenant demand is increasing, leading them to predict rents will keep rising in the near term.
Rent rises were the highest in Wales - 5.8 per cent in the year to the end of June. In Scotland, rents were up 5.5 per cent, while England saw an increase of 5.1 per cent.
The rises for England, including London, were the highest percentage increases reported since record-keeping started in January 2006.
After months of domination by the East Midlands, the baton for the region with the highest annual rent increase has passed to the West Midlands, where tenants are paying 5.4 per cent more rent than a year ago.
The lowest rent increase in England was in the Northeast, where tenants paid 4.4 per cent more than a year ago.
More than a million renters aged 65 and over are expected to become long-term renters after missing out on buying a home.
Saving for a deposit and rising mortgage rates are expected to crush their hopes of ever becoming owners, says research by property firm Hamptons.
“The increasing number of older renters means that the total amount in annual rent paid by over 65’s is projected to increase from £5.1bn in 2023 to £12.7bn by 2033 (assuming no rental growth and reflecting rents at 2023 rates),” said the report.
“In contrast, 78% of households aged 65 and above own their homes outright, and those with a mortgage pay around £1.8 billion annually in repayments, less than half of what is paid in rent. As context, renters of all ages will likely hand over around £69.0 billion in rent this year.”
Tenant referencing firm Homelet has published data showing the average UK rent has soared 10.4 per cent in a year to £1,229 a month, and the rate of increase shows no sign of slowing.
Outside London, the average monthly rent is £1,027, while tenants pay £2,077 monthly in the capital.
However, the cheapest region, the Northeast, saw rents drop 1.1 per cent to an average of £625 a month.
“With another increase, it is clear that there is a continued risk for tenants and landlords, with a real likelihood that tenants up and down the country might struggle with paying their rent,” said CEO Andy Halstead.
The firm analysed rents across London and discovered rents are rising at almost double the rate in East London compared to those in North and West London.
The most significant percentage increase was in Barking & Dagenham, where rents are 17.9 per cent up in a year, while the weakest performance was a 7.6 per cent rise in Camden.
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.
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.
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.
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 based on what they think rather than data.
Homelet statistics come from customer data, which may only partially reflect the market.
That's 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.
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.