Along with greater tenant demand there are now more professional landlords, and rising industry standards are contributing towards increasing rental prices.
The Office for National Statistics (ONS) has published the latest index of Private Housing Rental, revealing that UK rental values grew by 1.5% in January, up from 1.4% in December 2019.
The data also shows that between January 2015 and December 2019, private rental prices in the UK increased by 8.6%.
Since 2018, private rental prices paid by tenants throughout the UK have started to strengthen on the back of London seeing a gradual increase in demand throughout the last 12 months. London private rental prices increased by 1.3% in the 12 months to January 2020. Prior to this, from the start of 2016 the private rented sector (PRS) had been slow with ‘accidental’ landlords withdrawing from the market.
Excluding London from England, privately rents increased by 1.7% in the 12 months to January 2020. In Wales, they grew by 1.3% in the 12 months to January 2020, up from 1.2% in December 2019. Rental growth in Scotland increased by 0.6% in the 12 months to January 2020, unchanged since December 2019.
North-west has fastest rising rents
The latest data also shows that rents in the north-west are growing faster than any other region in the UK. Rental values in the north-east, north-west, East Midlands, Scotland, Yorkshire & Humberside, Northern Ireland and Wales all rose at a rate faster than the UK average.
While rents across the UK had been growing at lower than the rate of inflation, the latest ONS statistics show the balance has now tipped slightly the other way.
In its December 2019 Residential Market Survey, the Royal Institution of Chartered Surveyors (RICSs) reported that the majority of UK regions saw an increase in enquiries over the month. Alongside this, landlord instructions continued to decline.
UK’s professional landlords invest in bigger portfolios
Research indicates that the professional landlord continues to be committed to investing in the PRS. Head of research at Hamptons International, Aneisha Beveridge, commented: “Those landlords who have stayed tend to have bigger portfolios – a further sign that the sector is professionalising.
“The average landlord in Great Britain owned 1.93 properties last year, the highest level since 2009. Rents rose in every region across Great Britain in January to stand 3.6% higher than at the same time last year. For example, a property that was rented for £500 per month in January 2019, which had a rent increase of the average UK rate, would be rented for £507.50 in January 2020.
“The number of new homes purchased by landlords remains low, which is feeding through to fewer homes available to rent. This is particularly true in the south, where rents are rising the most.”
However, the Association of Residential Letting Agents (ARLA) reported in its Private Rented Sector Report December 2019 that demand from prospective tenants continued to fall, while the number of landlords exiting the market remained the same.
“These supply and demand pressures can take time to feed through to the Index of Private Housing Rental Prices which reflects price changes for all private rental properties rather than only newly advertised rental properties.”
