UK sees rent rise at fastest pace since records began

The cost of private rent has seen the biggest increase since records began in the 12 months up to June, and the price is predicted to rise even higher in the near term. According to the Office for National Statistics (ONS), rents across the UK in the 12 months up to June 2023 increased by 5.1 per cent with higher rises recorded in Wales and Scotland . This is the steepest annual increase in private rent since records began in January 2016. It is also up from an increase of 4.9 per cent in the 12 months up to May 2023. Michelle Lawson, director at Fareham-based broker Lawson Financial, said: “Rents continuing to rise really is no surprise. With rising mortgage costs, increased regulatory costs and the removal of Section 24, landlords cannot absorb these rises any more and they are naturally having to be passed up the chain. “One thing that needs to be understood is landlords should not be vilified nor the sector made any more divisive than it is as they do not do this without just cause as a good tenant is worth their weight in gold.” The annual private rental prices increased by 5.1 per cent in England, 5.8 per cent in Wales and 5.5 per cent in Scotland in the 12 months to June 2023. In England, the highest annual percentage change in private rent was in the West Midlands, at 5.4 per cent, while the North East saw the lowest at 4.4 per cent. London’s rental prices – which accounts for almost a third of UK rental expenditure – increased 5.3 per cent in the 12 months to June 2023, which is up from an increase of 5.1 per cent in the 12 months to May 2023. This is also the highest percentage change in London since September 2012. The latest report from the ONS also shows that the annual growth rate of private rental prices in the UK began to increase in the second half of 2021. Annual growth was seen across all regions except London where prices decreased. This was also during the lockdown when many people who worked from home moved out of the capital to cheaper areas. The annual percentage change in rents increased across all regions in 2022, including London, and this continued into early 2023. According to the Association of Residential Letting Agents (ARLA) in their June Housing Insight Report, the number of new prospective tenants remained strong in June compared with May, while stock levels remain insufficient. The mismatch between supply and demand continued to grow in June, with figures showing a 57% increase in the mismatch since June 2022. This means that pressure on rent prices remains, with a majority of responding agents reporting rents increasing month-on-month on average. Meanwhile, the Royal Institution of Chartered Surveyors (RICS) reported in their June 2023 UK Residential Market Survey that tenant demand increased in June while new landlord instructions have fallen to the lowest amount since May 2020. With rising demand still being met with weakening supply, RICS reported that rental prices are expected to rise higher over the near term. Rhys Schofield, managing director at Derbyshire-based mortgage advisers Peak Mortgages and Protection, said: “It may be politically convenient to kick landlords from time to time but when demand is up 48% on pre-Covid levels, available stock is like hen’s teeth and with few viable alternatives to private rental for many, it’s clear that we need a healthy buy-to-let market. “Rents being forced ever upward certainly doesn’t do tenants any favours and that is the risk faced if we drive landlords out.” Stuart Crispe, founder at Sunny Avenue, added: “The data is unsurprising. There is a pronounced shortage of rental supply and always has been. “I am surprised the increases aren’t higher given the mortgage rate increases we have had. “Landlords, currently, will either be deciding to increase their rents or sell up. Either way, this is only going to further increase rents, putting more pressure on tenants.”