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According to official data from the Office for National Statistics, buy-to-let rents in London rose at their fastest rate for 17 years in the year to the end of July 2023.
Private tenants in the capital saw a 5.5 per cent increase yearly, a little from May’s 5.2 per cent annual increase.
The ONS says the rise is the highest since the agency started collecting data in London in January 2006.
Rents for the rest of the country were up 5.3 per cent.
The most significant yearly rent rises outside London were 5.5 per cent in Yorkshire, Humberside and the West Midlands. The lowest increase was 4.6 per cent in the North East.
The ONS report said: “The annual inflation rate of private rental prices in the UK began to increase in the second half of 2021. Yearly growth was seen across all regions except London, where prices decreased. The annual percentage change in rents increased across all areas in 2022, including in London, which continued in early 2023.”
Meanwhile, the Royal Institution of Chartered Surveyors (RICS) points out that tenant demand ramped up in the three months to July to become the most substantial quarterly rise since the start of last year. At the same time, new letting instructions from landlords were down, creating higher demand and a decreasing supply of homes to rent.
Separate data from tenant referencing agency Homelet claims the average UK rent is £1,232 a month, ranging from an average of £2,109 in London to £636 a month in the North East.
The firm’s CEO, Andy Halstead, said: “The capital shows no signs of slowing down either, with yet another record price for Greater London. It is not so long ago that we were talking about London breaking the £2,000 a month barrier for the first time – a big leap to £2,077 a month is a sign of how a lack of available rental properties is pushing prices up for tenants and making the private rental market more unstable for tenants and landlords alike.”
Check the data carefully. The various indices cover different periods, and the demographics of the samples vary between reports.
The Office for National Statistics (ONS) has the most extensive sample, so it should return the most reliable figures. However, the time to collect and analyse the statistics often means the ONS data lags a month behind the rest of the sector.
The Association of Residential Letting Agents (ARLA) derives insights from letting agents and provides a sentiment survey rather than measurable data.
Homelet statistics come from customer data, which may only partially reflect the market.
Fixing rents is a business decision for landlords. Rent statistics indicate how the market moves but do not reflect demand from tenants and property standards in local neighbourhoods.
Remember that the data is historical, showing what's happened rather than what will happen.
Check the data carefully. Other indices cover different periods, and the samples vary between reports.
The ONS has the most extensive sample, so the most reliable figures should return, but the time 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 based on what they think rather than data.
Homelet statistics come from customer data, which may only partially reflect the market.
That's a business decision for landlords. Rent statistics indicate how the market moves but do not reflect demand from tenants and property standards in local neighbourhoods.
Remember that the data is historical, showing what's happened rather than what will happen.
That's up to individual landlords. For instance, one index with a solid customer base in the same area as a landlord's portfolio may align more closely with market rents for that neighbourhood.
Average data is only good if you 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 indicate better where a landlord should pitch a competitive rent and stop them from under or over-selling.