According to the latest data from lettings agency Hamptons, the average rent on a newly let property in Britain reached an all-time high of £1,273 per month in June. This figure represents an increase of £110 per month or 9.4 percent compared to the same period last year, marking the sixth strongest annual rent surge since Hamptons began keeping records in 2014.
The steep rise in rent costs means that the average tenant will have to bear an additional financial burden of £1,315 per year compared to someone who moved into a new home just twelve months ago.
The escalation of rental prices has been particularly pronounced in the one-bedroom housing market. After crossing the £1,000 per month threshold for the first time in May, the average rent on a one-bed home in Great Britain surged by 11.1 percent year-on-year, now standing at an average of £1,017 per month. Astonishingly, this means that the average cost of a one-bedroom property is now equivalent to the average cost of a two-bedroom property just fifteen months ago, in April 2022.
Similarly, the average rent for a two-bedroom property now matches what a three-bedroom property cost in January 2022. The average rent for a two-bedroom home now stands at £1,170 per month. Both two-bed and three-bed properties experienced comparable rental growth, with increases of 10.9 percent and 9.3 percent, respectively.
Rental prices have been on the rise across all regions, although the pace of growth has moderated in Greater London, Scotland, and the East of England—areas that had witnessed the most significant rental hikes. In June, rents in the North of England joined Greater London in experiencing double-digit growth. This occurrence marks the fourth instance on record in which rents in the three Northern regions (North East, North West, and Yorkshire and The Humber) have surged by more than 10 percent, all of which have taken place within the past 24 months.
Aneisha Beveridge, head of research at Hamptons, attributes the widespread rent increases to a combination of factors, including a scarcity of available properties and rising costs for landlords. Beveridge also highlights high mortgage rates as a contributing factor, as they have dissuaded potential first-time buyers from entering the housing market and increased demand for rental properties.
Beveridge further notes that while there are a similar number of households seeking rental accommodation as in 2019, there has been a staggering 47 percent reduction in available homes. With interest rates projected to remain elevated for an extended period and few new landlords entering the market, these pressures are likely to persist in the medium term, according to Beveridge.
The continuous surge in rental prices poses a significant challenge for tenants across Britain, who are grappling with the financial strain caused by these record-breaking figures. As the rental market remains under pressure, it remains to be seen how policymakers and stakeholders will address this growing affordability crisis in the housing sector.