It is the largest annual percentage change since records began in 2016
Private rental prices paid by tenants in the UK increased by 4.7% in the 12 months to February 2023, according to the Office for National Statistics (ONS).
This rental price growth rate, up from the 4.4% recorded in January, represents the largest annual percentage change since the data series began in January 2016.
ONS said that annual private rental prices increased by 4.5% in England, 4.2% in Wales, and 4.9% in Scotland over the year to February 2023. Within England, the East Midlands saw the highest annual percentage change in private rental prices at 4.9%, while the West Midlands saw the lowest at 4%. London’s annual percentage change in private rental prices was 4.6%.
“This record-breaking annual rental price rise of 4.7% speaks to the strong competition for new lets, as well as the shortage of supply,” commented Carl Howard, group chief executive at Andrews estate agents. “The current mismatch between population growth and house building is continuing to stoke demand for rental properties, particularly in cities and commuter hubs.
“Another big factor has been the growing pressure on landlords, hit by the spiralling cost-of-living and increased mortgage rates — a legacy of the autumn budget. With double-digit inflation continuing to lift their costs across the board, many buy-to-let owners are struggling to justify holding onto investment properties.”
Riccardo Tessaro, co-founder and chief executive at rental accommodation company Gravity Co, believed that with fewer private landlords buying properties to turn into rental accommodation due to the high costs of servicing a mortgage, this price growth was likely to continue in the coming months.
“With rents edging upwards and inflation still sky-high, prospective tenants are looking at the overall cost-of-living somewhere, rather than focusing on the monthly rental price alone,” Tessaro said. “We are increasingly hearing from renters who are prioritising accommodation with a monthly price that includes bills, and they are particularly attracted to properties that include energy as part of that monthly payment.”
Recent research by homeownership provider Wayhome has highlighted the imbalance of the property market across England when it comes to the current level of rental stock versus that available to homebuyers, with rental properties accounting for just 5% of current market listings in some areas of the market.
“The imbalance of available property stock really highlights everything that is wrong with the property market in England,” said Nigel Purves, co-founder and chief executive of Wayhome. “This demonstrates why so many aspiring homeowners find it impossible to make the jump between the rental sector and buying for themselves.”
The Association of Residential Letting Agents (ARLA) stated in its February 2023 Housing Insight Report that the market remained very much out of balance, with demand continuing to outweigh supply.
The Royal Institution of Chartered Surveyors (RICS), meanwhile, reported in its February 2023 UK Residential Market Survey that tenant demand continued to increase. Meanwhile, landlord instructions continued to decline, but at a slower pace than in the recent past.
ONS, however, pointed out that these supply and demand pressures can take time to feed through to its Index of Private Housing Rental Prices as it reflects price changes for all private rental properties, rather than only newly advertised rental properties.
Any thoughts on this latest report on rental price increase? Tell us by leaving a comment in the discussion box at the bottom of the page.
