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Private rental prices jump by highest rate since 2016

Nick Cheek
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Nick Cheek

Private rental prices in the UK rose by 4.9% in the year to March 2023.

Figures from the Office for National Statistics (ONS) showed this was the largest annual increase recorded since 2016. 

Excluding London, prices rose by 5% over the period. 

England’s capital saw a 4.8% annual change in private rental prices, which was above the England average of 4.6% and the city’s strongest yearly growth since December 2012. 

Within England, rental prices in the East Midlands saw the highest annual change at 5.1% while the South East recorded the lowest at 4.2%. 

Private rental prices in Scotland rose by 5.1% in the 12 months to March, up from February’s annual growth of 4.9%. Prices in Wales increased by 4.4% during the period, up on the previous month’s rate of 4.2%. 

Rental price growth in Scotland was at its highest point since records began in the country in January 2006, and it was a similar case for Wales, which reported its strongest growth since January 2010 when prices first were recorded. 

Northern Ireland, which carries its data over from January, saw a growth of 9.9%. 

More landlords needed

Carl Howard, group CEO of Andrews Property Group, said: “Renters are needing deeper pockets and sharper elbows as rocketing demand continues to outweigh the availability of homes to let.  

“Another record rise in annual rental price growth reflects the frenzied market, which is showing no signs of letting up as the number of buy-to-let landlords dwindles.  

“Rate hikes and red tape have combined to push some landlords towards the exit door as investment properties feel more trouble than they’re worth. Many older buy-to-letters nearing retirement are deciding to cash in these nest eggs, and they’re not being replaced.”   

Howard added: “It has become harder for first-time buyers to scrape together a deposit to buy their own home – with inflation still in double figures – and accidental landlords, often couples with an extra property, are needing to sell to firm up their finances or fund their next move.  

“To ease the pressure on tenants, more needs to be done to attract buy-to-let landlords into the market. If not, we’re likely to see rental prices continue to rise over the coming months.” 

Rental demand outweighing supply

Riccardo Tessaro, co-Founder and CEO of flexible co-living brand Gravity Co, said: “The growing mismatch between supply and demand is pushing up rents sharply as increasingly desperate would-be renters outbid each other in the race to secure a place to live. 

“In many areas, prospective tenants aren’t just grappling with record-breaking rent rises; stiff competition means good homes are being snapped up as soon as they come on the market. 

“With many private landlords exiting the market as their buy-to-let sums no longer add up, and many younger people who might have bought a property now priced out of home ownership, there’s more demand for fewer rental properties.  

“This is prompting many renters to explore purpose-built rental properties, where availability can be better, and to prioritise accommodation with a monthly price that includes bills, enabling them to fix their biggest outgoings as the cost of living rises. 

“The only thing which can break the inflationary cycle is a better supply of homes to rent, including more high-quality purpose-built rental accommodation which provides many people with a place to live.”