UK rental prices in August rose at quickest tempo since information started

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Residential rental prices elevated on the quickest annual fee since information started seven years in the past, whereas UK home value rises slowed to the bottom fee in a decade, in keeping with official knowledge printed on Wednesday.

Non-public rents rose 5.5 per cent 12 months on 12 months in August, up barely from 5.3 per cent in July, and the most important annual proportion enhance for the reason that Workplace for Nationwide Statistics knowledge sequence started in January 2016.

In the meantime, the annual progress in home costs dropped to 0.6 per cent in July, down from 1.9 per cent in June, to the slowest fee since September 2012, in keeping with separate ONS knowledge.

The tendencies in rental and home costs replicate the surge in mortgage charges over the previous two years, which have made shopping for a property unaffordable for a lot of, boosting demand for lettings in a constrained market, the place landlords are additionally passing on their elevated borrowing prices.

Emma Humphreys, Associate on the legislation agency Charles Russell Speechlys, stated: “There are tenants struggling to pay their lease, and plenty of landlords are being squeezed simply as tightly, with rising mortgage funds and adjustments to tax reliefs forcing many to let go of their properties.”

Line chart of Annual change in rental price index, % showing UK residential rents rose 5.5% year-on-year in August

Though lenders have began decreasing mortgage charges in current months, they’re nonetheless near 15-year highs, reflecting successive fee rises by the Financial institution of England from a document low of 0.1 per cent in November 2021 to five.25 per cent.

The ONS knowledge confirmed that rents in August rose on the quickest fee in Wales at 6.5 per cent, adopted by Scotland at 6 per cent, whereas in England the common was 5.4 per cent. The info for Northern Eire is for June, which confirmed a 9.1 per cent rise.

London’s annual rental value progress, at 5.9 per cent, was the very best of all English areas and at its highest annual fee for the reason that knowledge sequence started in January 2006.

The capital was additionally one of many outliers in home value tendencies, registering a 0.8 per cent year-on-year drop in July, though the south west of England noticed an even bigger fall of 1 per cent.

The common UK home value in July was £290,000, down £2,000 from the height in November final 12 months however nonetheless £59,200 increased than February 2020, the final month earlier than the coronavirus pandemic hit.

Gabriella Dickens, economist at Pantheon Macroeconomics stated, more moderen knowledge from Nationwide and Halifax, which confirmed home costs falling on the quickest annual fee since 2009 in August, meant that “additional declines within the official index over the approaching months look seemingly”.