Private rental prices paid by tenants in the UK increased by 2.4% in the 12 months to March 2022, representing the largest annual growth rate since July 2016, according to ONS figures.
Growth in private rental prices has increased since the latter part of 2021, with widespread annual growth across all regions, with the exception of London.
In the 12 months to March 2022, rental prices for the UK, excluding London, increased by 3.3%, up from an increase of 3.2% in February 2022. London private rental prices increased by 0.4% in the 12 months to March 2022, up from an increase of 0.2% in February 2022.
London’s rental price growth in March 2022 (0.4%) remains the lowest of any of the English regions.
This reflects a decrease in demand, with remote working shifting housing preferences as workers no longer need to be close to offices. It also reflects an increase in supply, such as an excess supply of rental properties as short-term lets change to long-term lets.
Private rental growth by country
In England, private rental prices grew by 2.2% in the 12 months to March 2022, representing the highest 12-month growth rate since February 2017.
When London is excluded from England, private rental prices increased by 3.2% in the 12 months to March 2022, up from an increase of 3.1% in February 2022, and the highest 12-month growth rate since this series began in 2006.
Private rental prices in Wales grew by 1.6% in the 12 months to March 2022, up from an increase of 1.4% in February 2022.
Private rental prices in Scotland grew by 2.8% in the 12 months to March 2022, up from 2.6% in February 2022, and the highest annual growth rate since records began in 2012.
The annual rate of change for Northern Ireland in March 2022 (6.5%) was higher than the other countries of the UK.
Reaction
Paul Neal of Derbyshire-based Missing Element Mortgage Services:
“With the price of literally everything increasing, as witnessed by Wednesday’s inflation data, it is almost inevitable landlords will increase their rents. Mortgage rates are increasing along with their expenses and they will look to pass these increases onto their tenants. It’s another obstacle for generation rent when it comes to saving to buy their own home.”
Danielle Arnold, Head of Paraplanning at Wareham-based Bespoke Wealth:
“Further rises in average rents were almost inevitable. In the current climate, with inflation going through the roof, renters need to be on red alert to manage their expenditure.
“We regularly speak to tenants and many have raised the point that the cost of living squeeze is dramatically reducing their ability to save for a deposit to be able to own their own home. Careful financial steps need to be taken to ensure non-critical spending is managed for anyone seeking to get out of the rental market and onto the property ladder.”
Alastair Hoyne, managing director at Finanze:
“Landlords are running a business. If interest rates increase and they have BTL mortgages and are out of their fixed period or on a variable rate then their costs will increase. I have no doubt many will pass this cost onto their tenants. For tenants, the extreme cost of living squeeze is sadly going to be massively amplified.”
Wesley Davidson, founder of broker Fox Davidson:
“The rental market is already at breaking point. Unfortunately, we are speaking to landlords who are already increasing their rents due to higher mortgage rates and the general higher cost of living. Landlords need to balance their books and tenants will sadly bear the brunt.”
Imran Hussain, director at Nottingham-basedHarmony Financial Services:
“Rental prices are currently out of control. Demand for rental property is soaring but supply is drastically limited, as many landlords have decided to dispose of their properties due to the punitive tax regime. The rental market is a bleak environment for tenants right now.”
