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In this rent digest - March 2021, rent rises have plateaued for the past five months, although a few landlords are putting up prices, says a bulletin from the Office of National Statistics.
More tenants are looking to rent a home, but the number of homes available is falling. Around two-thirds of landlords are holding rents steady.
Although rents have increased by 10.2% since January 2015, rents across the UK rose 1.4% in the year until February – up just 0.1% on this January’s figure. The increase equates to a £7 rise on rent of £500 annually.
The ONS explains rents have slowed since the start of 2016 as rents in London dropped.
They picked up again in 2018, driven by rising prices in London but have stayed flat since November. The London effect on rent is revealed when data for the capital is stripped out of the figures. Including London, English rents grew by 1.3%, without an increase of 1.6%, up from 1.5% in January.
In Wales, rents rose 1.5% in the year – down slightly from 1.6% in January. In Scotland, landlords saw a 1.1% increase, up 0.1% from the month before. Rents in Scotland have tracked lower than in the rest of the UK since August 2016.
Looking at data for the English regions, the South West posted the best rental growth for the year to February, with a 2.3% increase. London rents were up just 0.8%, followed by the South East at 1%, says the February ONS Private Housing Rental Price Index.
Looking at rental data from other sources, the HomeLet Rental Index shows average rents for new tenancies in February were £984 a month - up 3% year on year.
The Homelet data comes from letting agents and landlords reference rent affordability for tenants. Excluding London, average UK rents were £840 a month. The highest annual rent increase was in the South West, where tenants pay 8% more. In London, rents were down 4.7% - the ninth monthly fall in a row.
The average London rent was £1,572. HomeLet chief executive, Andy Halstead said: “Those in the lettings sector warned of the Tenants Fees Act’s unintended consequences, along with the impact of the continued assault on landlords through policies that disincentive property investment. We’ve seen the volume of UK landlords dip, whilst supply from tenants has continued to grow. Landlords must charge more to cover their essential costs, including professional letting agent services. Ultimately this pushes increased rents back on to tenants, the same group who supposedly should have benefited from legislation like the Tenants Fees Act.
“With almost 1 in 5 people living in the private rented sector, it plays a critical role in the UK’s housing supply chain. Tenants should have the ability to rent a property at a reasonable price, while landlords and letting agents shouldn’t have to live in fear of future government policy. The continual raft of legislation seemingly favouring tenants or only pushing homeownership to capture the popular vote needs to stop.”
| Region | Feb-21 | Feb-20 | Yearly change | Jan-21 | Monthly change |
| East Midlands | £704 | £651 | 8.10% | £698 | 0.90% |
| South West | £914 | £849 | 7.70% | £919 | -0.50% |
| East Of England | £978 | £916 | 6.80% | £979 | -0.10% |
| South East | £1,087 | £1,018 | 6.80% | £1,094 | -0.60% |
| West Midlands | £749 | £708 | 5.80% | £741 | 1.10% |
| Yorkshire & Humberside | £680 | £645 | 5.40% | £680 | 0.00% |
| North East | £542 | £517 | 4.80% | £540 | 0.40% |
| North West | £782 | £755 | 3.60% | £775 | 0.90% |
| Wales | £673 | £650 | 3.50% | £675 | -0.30% |
| Scotland | £678 | £672 | 0.90% | £683 | -0.70% |
| Northern Ireland | £662 | £669 | -1.00% | £648 | 2.20% |
| Greater London | £1,572 | £1,650 | -4.70% | £1,563 | 0.60% |
| UK | £984 | £953 | 3.00% | £981 | 0.30% |
| The UK excluding Greater London | £840 | £793 | 6.20% | £839 | 0.10% |
Source: Homelet
For landlords confused by the stats and what they mean, here are some answers to the most asked questions about rents.
Check the data carefully. Different indices cover different periods, and the samples vary between reports. The ONS has the biggest sample, so it should return the most reliable figures, but the time taken 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 rather than factual data. Homelet statistics are based on customer data, which may not fully reflect the market.
That’s a business decision for landlords. The rent statistics indicate how the market is moving but do not reflect demand from tenants and property standards in local neighbourhoods. Don’t forget the data is historical, so it gives a picture of what’s happened rather than what will happen.
That’s up to individual landlords. For instance, one index with a strong customer base in the same area as a landlord’s portfolio may align more closely with market rents for that neighbourhood. Average data is not much good if you don’t 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 give a better view of where a landlord should pitch a competitive rent and stop them from underselling.
Although several letting agents and property organisations publish regular rent statistics, many have been affected by the coronavirus lockdown that has their reports suspended or delayed.