As the market continues to see huge levels of tenant demand, UK rents have increased by 8.7%, rising to 8.8% in England alone, but there are some wide regional differences.
In most markets, prices tend to be dictated by the level of appetite versus the amount of supply, and the UK rental market continues to be faced by a wide gap between these two variables. This has pushed UK rents to record-high levels in recent years, and this has also changed certain tenant behaviours.
Just like in the sales market, different locations offer different price points, and as UK rents have continued to climb, this has led to a rise in the number of renters seeking cheaper locations to live. This might mean moving from a city to a nearby commuter town, or relocating to a new region entirely.
The latest data published by the Office for National Statistics has revealed the current situation in the UK’s private rental market, with data showing how the sector has performed on both a monthly and an annual basis, to October 2024. It has found that average UK rents have risen to £1,348 in England, a rise of 8.8% compared with October 2023, while UK rents including Wales, Northern Ireland and Scotland have gone up by 8.7%.
The annual rate of growth recorded in October was up on the 12 months to September, which saw an 8.5% hike in UK rents. The recent record high rental growth was in March 2024, when UK rents increased by 9.1% annually.
Regional variations
The research drills down into how the rental market is faring across England’s regions, which can give a closer indication of where tenant demand is currently the greatest, compared with the number of homes available.
It found that rents have risen the most in London, with an annual increase of 10.4%. The capital is known for its extremely fast-paced rental market, and a high volume of tenants compared with homeowners, meaning demand is also extremely high there.
The region with the second largest increase in rents was the North West. Rents in this region are now 9.7% higher than they were a year ago, demonstrating growing tenant demand across the area. Places like Manchester and Liverpool have particularly high numbers of tenants living in them, while also being marked out as the locations where landlord yields are the highest.
Next on the list of above-average rent rises was the East Midlands, with annual growth of 9.1%. Below the England average of 8.8% are the rest of the UK’s regions, indicating that they could be experiencing a slightly smaller demand-supply gap.
UK rents will continue to rise
In separate research from Savills, the agency has predicted that UK rents are expected to climb by 17.6% over the next five years. This outpaces income growth, which is currently forecast to rise by 15% over the same period.
This is due to a combination of ongoing elevated tenant demand – which is thought to be down to people renting for longer before getting onto the property ladder – as well as low levels of properties being rented out by landlords.
Guy Whittaker, research analyst at Savills, said: “High demand and low supply have been the influence behind the significant rental growth seen over the past few years. At a national level, this pattern looks set to continue, with rents expected to rise above incomes again.”
He added: “It is challenging to see where an increase in rental supply will come from in the next couple of years. The increase to the existing stamp duty land tax surcharge for second homes will likely dampen demand from new buy-to-let investors, and it will prevent some existing landlords from expanding their portfolios.
“The potential requirement to upgrade Energy Performance Certificate (EPC) ratings by 2030 may see some leave the sector altogether, particularly in markets where the upgrades required would exceed an entire year’s rental income. In those cases, it may make more financial sense to sell.”
