Rents rise, but at a slower pace
Rents rose by 3.1% in the year to August, taking the average price from £885 per month to £913, according to new data from specialist insurance provider HomeLet.
However, the figures suggest that rental growth is slowing, as the 3.1% rise compares with annual rental inflation of almost 6% a year ago.
Rents continue to rise in every region of the country, with the exception of the North East, where rents fell by 1.6%. Rents went up the most in the East of England (5.8%), Wales (5.2%) and the North West (4.3%).
In Greater London, rents went up by a more modest 2.7%, with the average rent in August at £1,497 — just £40 more than a year ago.
Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company, says: “The latest HomeLet Rental Index reflects a private rental market in which landlords are engaged in a delicate balancing act: they’re acutely aware of tenants’ concerns about affordability while also conscious of the need to achieve their target yields against a backdrop of rising costs.
August’s figures suggest that rents are continuing to rise at a sustainable pace – ahead of price inflation, but well below house price increases, which were running at close to 6% according to the most recent data.
“In the medium to longer term, the fundamental driver of rents will be the balance between demand and supply for rented property. We expect demand in the private rental sector to continue to grow, in line with demographic changes such as population growth, and as affordability concerns remain in the house purchase market, so it is important that we see efforts to support supply.”
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An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).