- The South-West of England and Scotland saw rents increase faster than anywhere else in the UK over the three months to July 2015
- The average rent in the UK for new tenancies over the three months to July 2015 was £977 per month (£761 excluding Greater London)
- Average rental values increased in every region of the UK except the North-West when compared to the same period in 2014
- The average rent on a new tenancy in London now stands at £1,538 per month, 9.5% higher than a year ago
- Rent price increases running ahead of inflation and house price growth
New findings from the HomeLet Rental Index show that rent prices continue to rise across the UK, with many diverse regions now keeping pace with or exceeding the pace of price increases seen in London. The Index reveals that the average rent on new tenancies agreed in the three months to July 2015 across the UK was £977 a month, (£761 a month excluding Greater London). The average UK rent price was 11.8 per cent higher than in the same period of 2014.
The Index, which provides the most up-to-date figures on UK rent prices, shows that rent price growth in the private rental sector is now extremely broad-based with all regions, bar the North West of England, registering an increase in rents on an annualised basis over the three months to July 2015.
Three regions of the UK have seen rent prices rise at a rate exceeding that of London in the three months to July 2015. In the South-West of England rent prices on new tenancy agreements signed in the three months to July were 11.4 per cent higher than in the same period of last year. At the other end of the UK, meanwhile, the Scottish rentals market has experienced comparable price increases, with new tenancies commanding rent prices 11.2 per cent higher than this time last year. The South-East of England follows closely with prices 10.3 per cent higher over the three months to July 2015 than in the same period last year.
In London where, in cash terms, the average rent on new tenancies is more than twice as high as in the rest of the country, prices continue to rise. New tenancies signed over the three months to July came with rents that were 9.5 per cent higher than in the same period of last year.
Commenting on the report, Martin Totty, Chief Executive Officer, Barbon Insurance Group, parent company of HomeLet, said: “The July HomeLet Rental Index demonstrates just how broad-based the rise in rent prices has now become – this is a UK wide trend. Regions which have long been associated with a buoyant rentals sector, such as London, continue to experience rising prices, but rents are also rising in many other parts of the country at similar rates.
“The South-West of England, for example, is benefitting from its popularity with those attracted to the area for lifestyle reasons, as well as the strong local economy in many of the towns and cities of the region.”
Chart showing annual change UK average rental prices against house prices and inflation
Average Rental Values | HomeLet Rental Index
House prices | Land Registry Average House Price England and Wales (seasonally adjusted)
Data tables available on request
Martin Totty added: “Over the past few years, price trends in the rental market and house purchase market have been very similar. However, across the first half of this year, house price growth has slowed whilst rental values have continued to increase, perhaps reflecting a change in the relative attractiveness of renting versus buying over this recent period.
“With early signs of the cost of mortgage finance starting to edge up, it will be interesting to see if this recent trend continues or if the change in buy to let mortgage interest tax relief announced in the Summer Budget has any indirect impact on rental values with some suggesting it could further stimulate rental values over time if supply of rental properties is constrained as a consequence.”
HomeLet Rental Index regional rent price figures for the three months to July 2015
About the HomeLet Rental Index data
HomeLet Rental Index provides the most comprehensive and up-to-date data on new tenancies in the UK. As part of the referencing process for around 350,000 prospective tenants each year, HomeLet processes information including the rental amounts agreed, the number of tenants moving into the property, together with the employment status, income and age of all tenants. The trends reported within the HomeLet Rental Index are brand new tenancies which were arranged in the most recent period, giving the most relevant insight into changes in the Private Rented Sector. This is in contrast to many other rental indices which are based on all properties which are being managed, which may have had rental amounts agreed as long as two years ago.