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UK rents have climbed 9% in a year led by London market

UK rents continue to surge at a faster pace than house prices in the UK, with market insiders expecting rental costs to continue to rise.

The pace of rent increases has slowed considerably since the post-Covid peak, when there was sustained double-digit annual growth in the market. Now, the latest Office for National Statistics data has revealed that UK rents have risen by 9% year-on-year to December 2024.

This brings the average rent in England now to £1,369 per month (a 9.2% increase), while costs are lower in both Wales (£777 per month with an 8.5% rise) and Scotland (£991 per month with a 6.9% rise).

Agents continue to report heightened appetite for rental homes, though, with the latest Propertymark report showing that there were an average of seven tenant applicants per available property in November, demonstrating that demand still outstrips supply in most parts of the country.

UK rents by location

Interestingly, London is home to not only the highest rents in the country – currently at an average of £2,220 – but also saw the steepest hike in rents in the latest ONS figures, climbing by 11.5% annually.

The second fastest growth in England was found in the North West, whose rental market has seen huge levels demand in recent years, sparking a spike in interest from property investors. The region experienced an annual rent increase of 9.6% in the year to November, above the England average, bringing rents there to an average of £882 per month, which remains below the national average.

This was followed by the North East (8.9%), while down at the bottom with the lowest rental growth was Yorkshire and the Humber, with a 5.4% average increase for tenants renting there.

The North East remains the cheapest region to be a tenant, where average rents are just £706. In separate research, these cheaper regions (the North West, North East and Yorkshire) are also where the strongest rental yields can be found by buy-to-let landlords, due to the lower property prices in these areas alongside high tenant demand.

Keeping an eye on the market

Property investors who are scoping out the UK property market tend to keep an eye on the patterns and trends that UK rents are following. The more sustainable level of growth (compared with previously fast-paced rises in UK rents) provides a more positive position for tenants, while allowing investors to see which areas to focus on.

Supply and demand is one of the most important drivers behind rises or falls in UK rents, as it is with property prices. For a number of reasons, there has been more pressure recently on the private rented market; tenants are delaying homeownership for lifestyle or affordability reasons, while demand has also returned for city centre living, pushing up prices further in these locations.

While there have been reports of landlords leaving the market, with issues like taxes and regulations cited as the main drivers behind this, there remains huge appetite to invest in buy-to-let due to the ongoing high level of tenant demand. It means landlords are currently achieving excellent rental yields in well-chosen locations, alongside capital growth.

Should the government do more?

Under current circumstances, it is largely expected that UK rents will continue to climb, particularly in the areas where demand is the highest, with new supply levels struggling to keep up.

However, Nathan Emerson, CEO at Propertymark, pointed out that the lettings market has been “an extremely challenging prospect for many across the last twelve months”, with UK rents increasing by more than £100 per month for many tenants.

He added: “The UK government needs to concentrate on supporting both tenants and landlords by boosting the supply of new rental homes as it proceeds with the Renters’ Rights Bill. There must be a fair and workable balance for all involved, and one that encourages long-term investment in the rental sector as the population quickly approaches 70m people, up from 65m only ten years back.”

Also commenting on the latest ONS figures, Gareth Atkins, managing director of lettings at Foxtons, said: “Looking at the rental landscape in the year ahead, I expect to see traditional seasonality in the market, similar to 2024.

“Whilst we’re projecting modest rent growth of 3-5%, the real story will lie in the resilience of supply levels.”

If you’re a buy-to-let landlord or are thinking of investing in a UK property, get in touch with BuyAssociation today to find out more about our current and upcoming opportunities.

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