In a recent report published by the Office for National Statistics (ONS), it has been revealed that rents paid by private tenants in the UK experienced a significant increase of 5.1% in the year up to June. This marks the largest annual percentage change since official records began in January 2016. Notably, the rise in rental prices was even more pronounced in London (which accounts for almost a third of UK rental expenditure), where rents surged by 5.3%, the highest annual rate since September 2012.
Despite the easing inflation reported by the ONS, indicating a potential relief for mortgage holders burdened by consecutive interest rate hikes from the Bank of England, renters are unlikely to see immediate respite. Demand for rental properties remains strong, while the available supply remains insufficient, creating a significant mismatch between demand and supply. According to the Association of Residential Letting Agents, in June, the number of properties available to rent was 19 per cent lower than last year, while the number of new prospective tenants registering per member branch was up 27 per cent. This mismatch has been steadily growing since June 2022 and continues to put pressure on UK rents.
The surge in rental costs underscores the challenges facing the UK’s housing market, which has been grappling with rising interest rates. As mortgage costs continue to climb, landlords are compelled to raise their rents, making it even harder for tenants to keep up with their housing expenses.