Latest data from The Deposit Protection Service suggests rents have risen faster than inflation over the past year.
The organisation’s Rent Index shows that average UK monthly rents for Q3 2023 were £1,121.46: that’s a rise of 9.13 per cent or an average £93.79 since Q3 2022. Inflation increased by 6.7% during the same period, meaning that rents outstripped inflation by more than a third.
A separate survey from The DPS of more than 2,500 tenants during Q3 2023 confirmed that seven per cent said their rent had increased during the past six months. The same survey also showed that the proportion of tenants worried they might struggle to pay their rent in the future rose to 51%.
Service managing director Matt Trevett says “every region across the UK has witnessed inflation-beating rent increases during the past 12 months. The combination of increasing demand for rental property and cost-of-living pressures seems to be fuelling sustained rent rises. Rent increases are also affecting every type of property, whether flats, terraced, semi-detached or detached, which may also reflect demand for rental property outstripping supply in many parts of the UK.”
Scotland saw the largest annual rent increase at 13.56% (£123.45), with average rents reaching £1,033.80 by the end of Q3 2023.
The second highest annual rent increases took place in the east of England, where rents rose 11.32% (£113.55) to £1,116.87 per month. London saw the largest value increase, with average monthly rents rising 13.31% (£173.13) during the past 12 months to £1,922.37.
Flats in the east experienced the highest annual percentage increase of any property type, rising 16.88% to £1,034.41. Detached properties in the south east experienced the highest value rent rise, increasing by 12.66% to £1,857.81 per month.
ONS data exposes UK’s soaring rent prices
New data paints a picture of a widespread surge in rental prices across the UK.
The ONS has published for the first time data, showing trends in rental price movements for local authorities in England and Wales and regions of Scotland. The figures reveal rents have spiked across England with Bristol seeing a staggering 60% increase.
According to the Price Index of Private Rents (PIPR), in January 2015 the price of renting in the City of Bristol was £1,054, which increased to £1,688 in October this year.
Low supply and high demand
Over the last eight years, rental price growth has increased across all nations, caused by low supply and high demand for rental properties.
In recent times, Scotland’s rent prices have grown faster than England and Wales. In England and Wales between January 2015 and October 2023, rental prices grew most in, the City of Bristol (60.2%), South Gloucestershire (57.4%) and Salford (53.5%)
Meanwhile, they grew the least in, Runnymede (11.0%), Ceredigion (11.2%) and West Lancashire (11.7%)
In Scotland, rental prices grew the most in Greater Glasgow (63.7%) and fell the most in Aberdeen and Shire (negative 18.9%).
Average monthly rent highest in London
The average monthly rental price for Great Britain reached £1,202 in October 2023. This has been consistently rising, with an increase of £284 since January 2015, and has increased by £93 in the past 12 months.
Breaking down the figures across the country, the average price level for England (£1,239) is higher than for Scotland (£916) and Wales (£710). The average monthly rental price was highest in London, averaging £1,968 in October 2023, £734 higher than the next largest average rent, which was £1,234 in the South East.
The lowest average monthly rent was in the North East, at £644, for October 2023.
Rental demand to stay strong as many tenants say they’ll never buy
Over a third of current renters believe they will never be able to buy a home in future, with only 29% expect to become homeowners within the next five years.
Research by TSB points to the range of challenges faced by renters looking to take their first steps onto the property ladder. While property prices were cited as an obstacle to buying a home by 45% of renters, the challenge of not being able to save for a deposit and not earning enough to qualify for an appropriate mortgage were also cited as an obstacle by a third of those who did not own a property.
This comes at a time when rental prices are increasing at a significant rate – ONS data shows a 6.1% rise for private tenants in the 12 months to October 2023.
Renting was also linked to economic uncertainty with 76% of private renters saying that they had experienced moments of anxiety or worry related to their finances in the previous six months. This is compared to 46 per cent of people who owned their home outright. The TSB research was carried out by IPSOS among a nationally representative quota sample of 2,187 adults aged 18 to 75 in the UK, between September 29 and October 3.
Of the overall sample, 820 were adults who rent, or live in rent or rent free accommodation.
Deby Herring, Head of Mortgages at TSB, says “whilst the levelling out of prices might be good for first-time buyers, it isn’t just the cost of housing holding them back. There is a range of other factors making it hard for them to take their first step. The research coincides with TSB launching a mortgage product range specifically for first-time buyers. The mortgages will enable first-time buyers to move automatically onto a follow-on tracker rate that is lower than the current TSB Homeowner Variable Rate after the fixed period ends."
Zoopla boss blames record migration for UK rent crisis
The UK is facing a rent crisis as record net migration has increased the demand for rental accommodation, according to the boss of Zoopla, one of the UK’s leading property websites.
Richard Donnell, the executive director of Zoopla, told the Telegraph that renting was the "first port of call for most people who moved to the UK, putting pressure on the supply of rental properties and driving up rents. Many landlords were leaving the sector due to tax changes and regulatory reforms, creating a shortage of rental homes."
According to the latest figures from the Office for National Statistics (ONS), net migration to the UK reached a record 745,000 in 2022, meaning that more people arrived than left the country.
In the two years to June 2023, nearly 1.3 million people immigrated to the UK, mostly from outside the EU.
‘Triple whammy on the demand side’
Mr Donnell told the Telegraph “we have a triple whammy on the demand side, one element of which is migration.”
He also points "to the number of international students heading into the UK – but there isn’t enough purpose-built student accommodation (PBSA) to cope. The ONS says that 263,000 international students came to the UK in the year to June, mainly from India and China. So you get an overspill of that student demand into the private rented sector.”
Being sold by a private landlord
Mr Donnell said "that one in 10 homes that are advertised on Zoopla are being sold by a private landlord. The total number of private rented homes in this country is stuck at 5.5m and it has been for the last seven years. Some migrants would buy their home eventually, but many remain in the rental sector for longer than usual due to high interest rates and house prices. A strong jobs market was fuelling demand for rental accommodation, as more people moved for work."
David Miles, an economist at the Office for Budget Responsibility, backed up Mr Donnell’s suggestion that migration was playing a part in rapidly climbing rates. He told the Telegraph “it may be that recent high rates of increase in rents is linked to population increase and to fast growth in student numbers. It would be strange if that was not a factor.”
Rents across the UK increased by a record 8.4%
The ONS data showed that rents across the UK increased by a record 8.4% in the year to October 2023, the highest annual growth rate since the series began in 2015.
The average rent in the UK was £1,029 per month in October, up from £949 a year earlier.
Rising rents have contributed to a rise in homelessness and affordability problems for many renters, especially in London and the South East, where rents are the highest.
Charities have warned that the rent crisis is pushing more people into poverty and debt and called for more investment in social and affordable housing.