High demand continues to push up costs
Private rental prices paid by tenants in the UK increased by 3% in the 12 months to June 2022, the Office for National Statistics (ONS) reported.
The latest increase in private rental prices represents the largest annual growth rate recorded since the ONS Index of Private Housing Rental Prices (IPHRP) series began in January 2016. The index tracks the prices paid for renting property from private landlords in the UK.
Rental prices for the UK, excluding London, also increased by 3.6%, up from an increase of 3.4% in May 2022. London private rental prices increased annually by 1.7%, up from an increase of 1.5% in May 2022, the highest annual rate since February 2017. Despite this, London’s rental price growth in June 2022 remains the lowest of any of the English regions.
ONS said growth in private rental prices remained broadly flat between November 2019 and the end of 2020. The beginning of 2021 saw a slowdown in rental price growth, which was driven by prices in London. This may have been a reflection of a decrease in demand because of the COVID-19 pandemic, the ONS noted. Private rental price growth then increased during the latter part of 2021, with widespread annual growth across all regions, except for London. This growth has continued in recent months, with an increase in rental price growth in London since the start of 2022.
Read more: What can bring down rent prices?
The Association of Residential Letting Agents, in its May 2022 Private Rented Sector Report, reported that high demand continues to push up rents. Similarly, the June 2022 Residential Market Survey of the Royal Institution of Chartered Surveryors reported an increase in tenant demand over the month.
ONS said these supply and demand pressures can take time to feed through to the IPHRP, which reflects price changes for all private rental properties rather than only newly advertised rental properties.
Paul Brett, managing director of intermediaries at buy-to-let lender Landbay, said the private rented sector is an essential part of the housing mix, and there needs to be more rental properties available for rents to be more affordable.
“Despite reports of landlords selling up, many are expanding their portfolios and new, especially younger investors, are coming into the market,” he shared.
