The latest release from the UK Index of Private Housing Rental Prices (IPHRP) reveals that private rental prices paid by tenants in the UK have increased by 5.0% in the 12 months leading up to May 2023. This marks a slight uptick from the 4.8% increase observed in the previous 12-month period ending in April 2023.
The annual private rental price growth varied across the UK, with England experiencing a 4.9% increase, Wales seeing a 5.0% rise, and Scotland witnessing the highest growth rate at 5.4% in the 12 months to May 2023.
Examining the regional trends within England, the West Midlands recorded the highest annual percentage change in private rental prices at 5.2%. Conversely, the North East had the lowest increase at 4.3%.
London’s private rental prices demonstrated a 5.1% annual percentage change in the 12 months to May 2023, surpassing the national average for England and reaching its highest annual rate since October 2012.
The upward trajectory in rental prices across the UK reflects a trend observed since the second half of 2021, with growth occurring in all regions except London, which experienced a temporary decline. However, the capital’s rental prices have rebounded and contributed to the overall increase.
Factors such as rising demand and declining supply have contributed to this upward pressure on rental prices. The Royal Institution of Chartered Surveyors (RICS) reported increased tenant demand in May 2023, while new landlord instructions have decreased. Furthermore, more buy-to-let landlords have expressed interest in selling their properties, accompanied by a decline in interest from both UK-based and overseas buy-to-let investors. These factors have created a mismatch between rising demand and falling supply, leading RICS to predict further increases in rental prices in the near term.
It’s important to note that the IPHRP reflects price changes for all private rental properties, including existing rentals, rather than solely focusing on newly advertised rental properties. Consequently, supply and demand pressures may take time to fully manifest in the index.
The full report, including data breakdowns by country and region, can be found on the Office for National Statistics website.