The latest data from the Office for National Statistics (ONS) paints a concerning picture for renters in the UK. Renting costs have surged, with average rents climbing by 9.2% in the year leading up to March. This marks the sharpest annual rise since data collection began in 2015, underscoring the growing financial strain on renters’ budgets.
February’s figures already hinted at the steep climb, showing a 9% increase in annual rents. This continuous upward trend is exacerbating the challenges faced by renters, especially against the backdrop of a rising cost of living.
According to the ONS, the average rent in Great Britain reached £1,246 in March, reflecting a £104 (9.1%) increase compared to the previous year. In England, the average private rent soared to £1,285, marking the highest annual rise since 2006. Similarly, in Wales, renters are grappling with a 9% increase, bringing the average rent to £727.
Scotland witnessed a significant uptick as well, with the average private rent reaching £947 in March—a 10.5% increase from the previous year, albeit slightly lower than February’s 10.9% surge. Meanwhile, Northern Ireland saw a notable rise of 10.1% in average rent, the highest since 2016.
Richard Rowntree, managing director of mortgages at Paragon Bank, attributes this surge in rental inflation to the persistent imbalance between supply and demand in many parts of the UK. Despite a slight decrease in tenant demand from the record highs seen last summer, the shortage of rental properties persists. Rowntree emphasizes the urgent need to increase the stock of rental homes to align with expected population growth and household formation in the coming years.
However, amidst the soaring rents, there’s a contrasting trend in the housing market. The ONS reports a modest 0.2% dip in house prices nationally. While England and Wales witnessed a decline in average house prices, Scotland saw a notable increase of 5.6%. In Northern Ireland, house prices rose by 1.4% to £178,000.
Marc von Grundherr, director of Benham and Reeves, acknowledges the positive monthly growth in house prices but highlights the lag in reporting, with February’s figures still reflecting the lingering impact of the Christmas lull in activity. He anticipates a forthcoming alignment between mortgage approvals, mortgage-approved house prices, and sold prices.
Jeremy Leaf, a north London estate agent, views the ONS survey as particularly insightful due to its extensive coverage, encompassing a broader spectrum of transactions compared to major lenders’ surveys. Leaf anticipates downward pressure on mortgage rates following lower inflation, which, coupled with improved demand, is likely to stimulate housing market activity.
The latest figures underscore the pressing need for comprehensive policies to address the housing affordability crisis in the UK. As rents continue to soar and house prices fluctuate, ensuring adequate supply and affordable options for renters remains a critical challenge for policymakers and stakeholders alike.