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UK Housing Market: Rising rents are outpacing inflation

Updated: Mar 24

According to lettings agency Hamptons' most recent market overview, rental growth slowed down in February.

In Great Britain, the average annual rent increase for a newly rented home was 7.1% last month, compared to 8.3% in January and a peak of 12.0% in August 2023.

Nevertheless, the average tenant moving into a new property would pay an extra £87 per month, or £1,044 per year, in rent than if they moved last year due to increases in rental growth, which is still outpacing inflation.

Row of victorian townhouses in the UK

Rental growth has slowed as a result of these affordability challenges and an increase in the number of available properties. In comparison to the same period last year, when stock levels were at an all-time low, there were 30% more rental properties available throughout Great Britain last month.

Rather than an increase in landlord purchases, this primarily reflects the fact that properties are taking a little longer to let. The number of available rental properties is still 41% lower than in February 2019.

Scotland saw the highest increases in rent last month. Without rent restrictions, the average cost of a newly leased property in Scotland increased 11.0% annually. Scotland is one of only two regions where rents are still increasing at a double-digit rate, the other being the East of England.

This implies that landlords are raising their rents to the going rate by using unoccupied units.

Head of Research at Hamptons, Aneisha Beveridge, states: "The pace of rental growth continued to cool in February." However, annual rent decreases are still a ways off, and residents are still feeling the pinch.

"Landlords who need to refinance in 2024 will see a smaller adjustment in their mortgage costs than those who remortgaged in 2023 due to lower mortgage rates." This is gradually assisting in the book balance of mortgaged investors.


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